Unfazed by criticism from the affected sectors, it looks like Finance Secretary Benjamin Diokno is determined to continue pushing for reforms in the retirement pensions and benefits of MUP – military and other uniformed personnel.
His argument for the MUP reform is to prevent “fiscal collapse.” Last week he warned that unless this “elephant in the room” is addressed, it could bloat the national debt by about 25 percent by 2030 – about P850 billion annually over 20 years, or P3.43 trillion by 2030.
This has stirred a debate on fiscal prudence at all levels and sectors of government. People are taking a closer look at where taxes are going, and whether taxes are being properly collected. Especially with the national debt ballooning further to a fresh record high of P13.86 trillion in March – with Marcos 2.0 incurring over P1 trillion in its first nine months alone.
Whether political will can be mustered to push through with the pension reforms is another story.
Affected sectors are already asking why they are being singled out, while retirees in the judiciary and the constitutional bodies, for example, who enjoy hefty pensions are left untouched.
To quell the grumblings, Diokno is proposing that the reforms cover only active and MUP entrants. This, however, still leaves a hefty funding requirement. In 2021, the government’s P160-billion allotment for the MUP pension was reportedly 38 percent higher than for maintenance and other operating expenses and capital outlays.
On average, MUP pensioners get 8.8 times more than private sector retirees under the Social Security System and 2.9 percent more than those covered by the Government Service Insurance System.
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Diokno points out that the MUP pension is unique. For one, it is fully state-subsidized. Unlike other workers in government and the private sector, MUP don’t contribute part of their income to their retirement fund. One reason given is that their job description requires putting their lives on the line. MUP include police, corrections, jail and fire protection as well as coast guard personnel.
But health frontliners can argue that they also risk not only their lives but also those of their loved ones through constant exposure to potentially deadly pathogens. Yet they don’t enjoy the same retirement benefits, and they even have to beg for payment of their COVID hazard pay.
Apart from requiring MUP to contribute part of their salaries to their retirement fund, Diokno wants to end the automatic indexation of MUP pensions to active duty rates, and pegging to the next higher rank upon retirement.
MUP who have served for 20 years are entitled to a pension. Diokno wants to set a retirement age of 57. When Rodrigo Duterte doubled MUP salaries in 2018 during his presidency, the MUP pensions also saw a commensurate increase.
Several military retirees have spoken out on these points, asking why Diokno, if he was genuinely concerned about fiscal collapse, didn’t stop Duterte from giving MUP such a hefty pay hike.
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The retirees say that if Diokno, who was the budget secretary at the time, had tried to dissuade Duterte but failed, Diokno should have resigned, instead of accepting a promotion as central bank governor – the highest paying job in the Philippine government.
Along this line, critics are pointing out that if Diokno’s pet project, the Maharlika Investment Fund, is created and he gets to be its manager, as he is suspected to be aiming for, he could edge out the Bangko Sentral governor as the highest paid public official.
For now, those opposed to Diokno’s push for pension reforms are focusing their efforts on stopping it.
Diokno has said his push has received the blessing of President Marcos. In case Congress rubberstamps the proposal, those affected can channel their resentment to programs that promote fiscal prudence and good governance.
Some of them can network with other quarters with such advocacies. During the 2022 campaign, there was some talk about setting up user-friendly websites, or regular posting of data explaining where taxes go.
While access to government data will be limited, there are ways of projecting the cost to taxpayers of certain activities favored by politicians who treat public coffers like their personal piggybanks.
Incorrigible revenge junketers, for example, will find the flimsiest excuse to justify their foreign trips, and will make every effort to conceal the actual cost to taxpayers. But the prices of airfares and accommodations are in the public domain, so these can be posted.
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Pre-pandemic when I was not yet avoiding public gatherings, ambassadors from several high-income and even middle-income economies had told me they found it scandalous to see such large official delegations during overseas travels of Philippine presidents. The diplomats noted that such practice is common among countries where corruption is a serious problem.
Those chafing over their retirement benefits being cited as a possible cause of fiscal collapse can also present a scrutiny of public spending priorities.
The Commission on Elections, for example, had warned that postponing the barangay and Sangguniang Kabataan elections yet again, by another year, would add P5 billion to the expenditures. Yet lawmakers who wanted to reward the barangay officials who helped them during the 2022 elections shrugged off the Comelec warning, and overwhelmingly approved the postponement – with BBM readily signing the law.
How much is the annual appropriation for the barangay and SK units? To give you an idea of this waste of precious public funds, one barangay in Malate, Manila passed a bizarre requirement for a “certificate of good moral character” from prospective tenants. At least there were adults at city hall who invalidated the ordinance. But you still wonder if the barangay officials were on fentanyl.
If Marcos 2.0 wants to prevent fiscal collapse, it should require fiscal prudence all around, and lead by example.
Diokno is getting support from many GSIS and SSS pensioners. But other administrations have tried in vain to address this fiscal problem, with Congress reportedly dropping it like a hot potato.
He will have to contend with the likelihood that imposing fiscal discipline on one particular sector, whether justified or not, will breed resentment.
The best thing that can come out of this controversy is greater public awareness of the proper use of people’s money, and greater effort on the part of government officials to use people’s money judiciously.
You wish.