Metro Manila (CNN Philippines, September 4) — The Department of Finance (DOF) on Monday defended its push to reform the pension system for military and uniformed personnel (MUP), noting how the government had to borrow billions in order to allocate a budget for the retirement fund.
“In 2020, we already have arrears in the neighborhood of ₱34 billion pambayad lang ng pension at ang nangyayari is that nade-delay ang pagbayad ng pension (only for the payment of pension and what happens is that the payment of pension gets delayed),” DOF Undersecretary Alu Tiuseco told CNN Philippines’ The Source.
She also noted that since 2018, the budget allocated for pensions has been bigger than the funding for the needs of those still in service. She warned that “If we do not do any refunds right now, if it’s status quo, our unfunded liabilities could reach ₱14 trillion.”
The House of Representatives approved in August a bill seeking to change the MUP pension to address the rising costs related to it.
Under the DOF’s proposal, new entrants will contribute nine percent based on their monthly base and longevity pay to the pension fund. Active personnel will contribute the same rate but this will be implemented in a staggered way.
“This is not an exaction…this is really for you. We save now so that the government can save with you and pagdating ng pension mo or magreretiro ka may pagkukunan ng pension mo (by the time you retire there is a source for your pension),” Tiuseco said.
The DOF is also proposing the removal of the full indexation of those who are going to retire.
Tiuseco explained that indexation in MUPs is when the pension of a retiree is automatically adjusted to the salary of those who are in active service. This means that “for every increase in the salary of those in the active service, automatically the pension will also increase by the same rate,” she added.
The DOF official emphasized that the MUP pension will “remain as the most generous” pension system in the country. What the department wants is to “unbundle the payment for active service and for those retired” which will give the government fiscal space to increase the salary or assistance to those who are still in service.
