Metro Manila (CNN Philippines, June 18) – The Department of Finance (DOF) wants military and uniformed personnel (MUP) in active service to contribute 5% of their monthly salary to the retirement fund for the first three years of the proposed pension system.
Meanwhile, Senate Committee on National Defense and Security chairperson Senator Jinggoy Estrada said government must not rush to approve the proposal but should carefully scrutinize it for the sake of the MUP.
The DOF also wants new entrants to the uniformed services to contribute 9% of their basic salary and longevity pay to the retirement fund.
The agency explained its proposal in a statement released by a technical working group on Friday. The TWG helps the Marcos administration draft a pension reform law for the MUP.
The TWG also said it is proposing that the government supplement the MUP contributions so that the monthly premium would total 21%, which is the same for other government employees.
“For the first three years, a 5% contribution of the MUPs in active service will be supplemented by the government with a 16% share to fulfill the 21% total monthly premium for the trust fund. This sharing scheme shall be adjusted until a 9% to 12% contribution ratio is reached on the seventh year,” the DOF explained.
“Meanwhile, new entrants shall contribute 9% of their base and longevity pay, with a corresponding 12% from the government,” it added.
Other government employees, who may retire at age 60 but must retire at age 65, contribute 9% of their monthly pay while the state supplements it with 12% for a total of 21% monthly premium.
On the other hand, SSS members, who retire at age 60, contribute 4.5% of their monthly pay while their employers supplement it with 9.5%.
Since the MUP retire at age 57, they enjoy their pension longer than other employees.
The MUP pension covers retirees from the Armed Forces of the Philippines, the Philippine National Police, the Bureau of Fire Protection, the Bureau of Jail Management and Penology, the Bureau of Corrections, the Philippine Coast Guard and the Philippine Public Safety College.
The computation for the proposed contribution of MUP will be based on data from the updated actuarial study of the Government Service Insurance System (GSIS), which will be released soon.
According to the DOF, the GSIS will invest the monthly premiums to acquire the required return of 85% to 90% of the pension upon retirement.
Finance Secretary Benjamin Diokno has warned that a “fiscal collapse” will happen if the MUP pension will continue to be funded by taxpayers’ money and government borrowings.
President Ferdinand Marcos, Jr. has supported the proposal to reform the MUP pension system and urged the government to establish “the most strategic mechanism” that will enable the system to survive in the long run.
READ: Biting the bullet: The Marcos administration’s push for MUP pension reform
However, he also noted the need for reforms in the MUP pension system.
“We also cannot turn a blind eye to the pressing concerns surrounding their pension system which calls for immediate and comprehensive reform,” he said.
