DOF: MUP reform like forced savings

MANILA, Philippines — The Department of Finance (DOF) has affirmed that the proposed reform of the military and uniformed personnel’s pension system in the country will function akin to a mandatory savings scheme, as it engages in ongoing dialogues with the MUP (military and uniformed personnel).

The DOF recently met with members of the Philippine Air Force as part of its strategy to properly explain the proposed pension system reform.

Finance Undersecretary Maria Cielo Magno emphasized that it is necessary to have “vested rights for a secure and predictable pension system.”

“Let us not think of this as tax that won’t be returned. This is like forced savings on our part so that we will have something ready upon retirement,” Magno said.

He likewise highlighted the danger behind the current pension system which solely relies on the national budget.

The current MUP pension system is non-contributory and, as such, retirement pensions and benefits are fully funded by the government through annual appropriations.

“An economic crisis, budget problems, and a ballooning deficit may affect the pension to be given to retirees if there are no vested rights assigned to the retirement fund,” Magno said.

The PAF, for its part, maintained that while its primary focus is the morale and welfare of the MUP, it is also recognizing the need to provide opportunities for the future generation of soldiers.

“We support this move by the government to have a secure pension system that will protect us once we bow out of the service,” PAF chief sergeant major John Roxas said.

“We are hoping that we will meet halfway for the betterment of our government and also for the betterment of the morale and welfare of our entire member,” he said.

A survey among members of the Armed Forces of the Philippines, which PAF is a part of, is also being conducted to help the economic team craft a balanced proposal.

Moving forward, the DOF will continue to hold consultations with the Presidential Security Group, Philippine Navy, Philippine Army, Philippine National Police, Bureau of Fire Protection, Philippine Coast Guard, Bureau of Corrections, Bureau of Jail Management and Penology, and the National Mapping and Resource Information Authority.

Apart from the reform to be applied to active personnel and new entrants, the MUP reform also aims to adjust pension benefits by up to 1.5 percent within a given year, subject to evaluation of economic conditions and actuarial life of the pension fund.

As part of its proposal, the DOF suggests that the MUP should commence receiving their monthly pension at the age of 57, thereby altering the existing framework. Presently, MUP personnel have the choice to pursue early retirement after completing a minimum of 20 years in service.

The proposal calls for the MUP pension to be based on their rank upon retirement instead of being automatically indexed to the salary of the next in rank in the active service.