‘Fiscal collapse’

They’re playing with fire. This is former senator Antonio Trillanes’ assessment of proposals to cut the pensions of military and other uniformed personnel to avert what Finance Secretary Benjamin Diokno has described as “fiscal collapse.”

By the standards of government workers, the pensions are substantial: a retired general gets about P220,000 a month, with even bigger amounts for the four-star beneficiaries of the revolving-door policy who served as Armed Forces of the Philippines or national police chief for just a few months.

Compare that with the monthly pay of government nurses (P32,000 for entry level), and you can see why the issue is causing restiveness within the ranks of state workers.

Health frontliners, however, don’t resort to armed force to express their discontent, unlike the military and (occasionally) the police. Trillanes, a soldier-turned-politician who staged several failed mutinies, would know about military restiveness.

Whether Diokno and the Marcos administration are indeed “playing with fire” in pushing for the MUP pension overhaul, however, is uncertain. Trillanes, being an ex-soldier, is not a neutral observer in this issue. Is the “fire” still there?

When money is involved, maybe.

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Among other things, Diokno takes issue with the fact that unlike other government employees as well as workers in the private sector, MUP don’t contribute a single centavo for their retirement benefits. The program is funded 100 percent by the state.

Another issue is that apart from the large amounts for retired officers, the pension is passed on to the spouse in case of the MUP’s death. If the spouse is much younger, the pension payments for one MUP can last over 50 years.

Diokno also wants to raise the mandatory retirement age to 57 – a year longer than the current requirement – and to amend the rules on optional retirement, which is allowed after 20 years of service.

Still another issue that Diokno wants changed is the automatic indexation of the pension amount to active duty rates. So when Rodrigo Duterte, who has a soft spot for anyone with a state-issued gun, doubled MUP salaries effective Jan. 1, 2018, retiree pensions went up commensurately.

Facing “The Chiefs” on One News before the Holy Week, Trillanes harrumphed that Diokno, as Duterte’s budget secretary, had pushed for the pension reforms, but went along with the hefty MUP pay hikes.

Trillanes said Diokno and the Duterte administration also ignored his proposal to make the MUP pension overhaul less painful for the retirees, by classifying a chunk of the pension as allowance, so that the amount indexed to active-duty rates would be smaller.

OK… Duterte would have rejected outright anything proposed by his arch critic Trillanes, or by former senator Richard Gordon for that matter.

Gordon told The Chiefs in a separate interview that several administrations even before Duterte had seen the problem with the MUP pension scheme, particularly after the corruption scandal that rocked the AFP Retirement and Separation Benefits System in 1995. In 2017, retired Army general and former RSBS president Jose Ramiscal Jr. was convicted of graft over the scandal.

But all these administrations, Gordon said, lacked the nerve to implement reforms – again because of the military / police record of expressing disenchantment by overthrowing the president in a coup d’etat.

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Only two coups have in fact succeeded in effecting leadership change in this country, and both were backed by people power: the first in 1986, which brought down the Marcos dictatorship, and the second in 2001 (remember EDSA Dos? Joseph Estrada does). Still, the coup threat apparently spooked post-Erap presidents enough for them to lay off the uniformed personnel’s pension system.

The annual pension allocation kept ballooning, till Marcos 2.0 now needs P120-P130 billion for MUP retirees.

Marcos Junior won’t admit it in public, but he must surely also have in mind what military restiveness did to his father’s regime. If he’s going to package the MUP reforms as a measure to prevent fiscal collapse, he must lead by example in fiscal prudence.

He may, for example, forgo indulging his inner royalty groupie with a junket (to be fully bankrolled by Pinoy taxpayers) to London for the coronation of Britain’s King Charles III and Queen Camilla.

Even if BBM vows to keep his delegation to the UK small, it’s doubtful that his usual coterie of feeling-Maharlika jetsetters can resist tagging along, at taxpayers’ expense.

If BBM decides to skip the coronation, he may also want to limit the country’s representation to the event (snubbed by British pop royalty including Harry Styles, Adele and Elton John) to Philippine diplomats, instead of again deploying his kid sister (with husband in tow) as his personal representative.

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Gordon told us that he had a get-together recently with several former Armed Forces chiefs, during which the pension reforms came up. The retirees, he said, “realize there’s a problem.”

The pension scheme is not unique in the world. There are other countries that give special treatment to those whose work intrinsically requires risking life and limb to keep the nation safe.

If this is the main justification, however, health frontliners will want higher pay and similar privileged treatment, in light of what happened to their ranks during the COVID pandemic. And health frontliners rarely betray their professional vows by engaging in high crimes such as torture, summary execution, drug trafficking and plunder – activities wherein too many soldiers and cops have been implicated.

Some quarters say cutting existing pensions and retirement benefits as well as requiring MUP to get automatic salary deductions as contribution to their pension is against the law. Any reforms will have to apply only to new MUP recruits.

Those pushing for reforms, on the other hand, say this can be cured by legislation. BBM enjoys a super majority in Congress; can he get his allies to pass such a law? Does he really want them to?

Gordon, who is suggesting military conscription to reduce MUP personnel expenses, told us even members of previous Congresses were reluctant to go head-to-head with the military on this issue.

He says fiscal collapse can be averted if part of the pensions and benefits will be converted into non-monetary privileges for uniformed personnel and their families, such as state-subsidized tax-free shopping outlets as well as education and other perks for the MUP and their immediate family members.

Gordon believes MUP are “reasonable” folks who can understand the country’s precarious fiscal situation, if properly explained to them.

“You have to have a dialogue… start a conversation right away,” he said. “The military has got to be part of the solution.”