THE proposed law reforming military and uniformed personnel (MUP) pensions will likely pass before the end of the year, Finance Secretary Benjamin E. Diokno said.
“The military pension reform is (on) the priority legislative agenda of the President, concurred in by Congress. We expect this to be passed before the end of the year. It will have an impact as soon as January,” Mr. Diokno said at a briefing on Tuesday.
MUP pension reform is on the Legislative-Executive Development Advisory Council’s list of 20 priority measures that are targeted for approval by December.
The Department of Finance (DoF) has said that a MUP reform bill will be presented to Congress by August.
“The reform of military pensions is going to be a game-changer. We have to address this issue once and for all; otherwise, it will have a catastrophic impact in the future,” Mr. Diokno said.
Mr. Diokno has said the current entitlements would cause “fiscal collapse” if left unaddressed.
“The (reform) will open up a lot of fiscal space in the budget. If my numbers are right, in 2024, we have allocated something like P300 billion; that’s approximately $6 billion, for military pensions,” Mr. Diokno said.
The DoF also announced that it recently concluded its series of roadshows on the planned MUP reforms.
“We explained to (beneficiaries) that this is really for their own good — to make the pension system more sustainable in the future,” he said.
“The treasurer and my undersecretaries have been going around and explaining (the reforms). And so far, I think the results of the consultation are very encouraging,” he added.
According to Mr. Diokno, the reform will slowly transition active-duty MUPs to make them bigger contributors to their pension scheme.
“Those who are already retired — we’ll not touch (their pensions), more or less, because that’s like a contractual obligation to them; those who are in active service will be asked to contribute gradually to the system; and those who are going to be recruited for the first time will pay the full amount of the benefit. That’s basically the way it will be structured,” he said.
Earlier versions of the MUP reform proposed that current active-duty personnel contribute 5% of their monthly pay over the first three years, which will be topped up with a 16% contribution from the government for a total monthly premium of 21%.
This scheme will gradually be adjusted to 9% and 12% shares, respectively, in the seventh year.
New MUPs would pay 9% of their base and longevity pay, with a 12% contribution from the government.
President Ferdinand R. Marcos, Jr. said in his second State of the Nation Address that the government is working on making the reform “fully functional and financially sustainable.”
“We are once again working closely with Congress to ease the transition from the old system to the new one, so as to be able to guarantee that no effects are felt by those in the uniformed services,” he added. — Luisa Maria Jacinta C. Jocson
