A house ad hoc committee has approved a substitute bill reforming the pension system for military and uniformed personnel (MUP) after a Palace-drafted measure drew complaints from soldiers and police.
Speaker Martin Romualdez commended the members of the ad hoc committee for coming up with a revised version of the reform bill that is now acceptable to all stakeholders, including the Armed Forces of the Philippines (AFP) and the Philippine National Police (PNP).
“Thanks to the House ad hoc committee, our military and uniformed personnel as well as their families will be able to sleep well, knowing that their pension will be paid in full and that their pay will go up every year,” Romualdez said in Filipino.
The MUP pension program covers members of the AFP, PNP, Bureau of Jail Management and Penology, Bureau of Fire Protection, Philippine Public Safety College, Coast Guard, and Bureau of Corrections.
Under the current system, MUPs do not contribute to their pension.
Instead, the pension benefits are drawn annually from the national budget.
MUPs are also automatically promoted one rank higher upon retirement and can receive their pension after 20 years of service, with no minimum pensionable age. The monthly pension is also automatically indexed to the salary of active personnel.
He noted that the stakeholders invited to the first hearing of the ad hoc committee expressed satisfaction with the provisions of the substitute bill.
Romualdez ordered the creation of the ad hoc committee to thresh out disagreements over various proposals for pension system reforms.
It is chaired by Rep. Joey Salceda, chairman of the House committee on ways and means.
The key agreements reached during the hearing include:
* A 90 percent maximum retirement package based on the base pay of all MUP;
* The inclusion of PNP personnel who served under 20 years in the list of those eligible for a separation lump sum;
* A retirement age of 57 for all MUP;
* A guaranteed 3 percent salary increase annually for all MUP;
* Two separate pension management systems, one for the AFP and one for civilian uniformed personnel;
* A 50 percent indexation for MUP; and
* The creation of a window in the pension fund system for disadvantaged pensioners.
Among these features, the 50 percent indexation and the eligibility of PNP personnel who served less than 20 years were major departures from the draft bill prepared by the Department of Finance.
“This landmark legislation demonstrates our unwavering commitment to the men and women in uniform, who risk their lives daily to maintain peace and order. It provides a robust, sustainable, and fair pension system that recognizes their invaluable service to our nation,” Romualdez said.
“With this reform, we’re not only prioritizing the well-being of our MUP but also ensuring the country’s economic stability,” Romualdez said.
Salceda said the members of the ad hoc committee agreed in principle on a pension reform program that is amenable to both the military and uniformed services and to economic managers, who were worried about the sustainability of the existing system.
“This is a win-win solution because we are removing the risks of sudden spikes in pension liabilities while also ensuring that salaries and pensions increase at manageable levels,” Salceda said.
“For the past 25 years, the salaries have only increased for nine years, so this is also a win for the active personnel, who will get a salary increase every year for the next 10 years,” he added.
“We are also ensuring that all the MUP services will get a separation benefit if they leave the service below 20 years in service. That is a new benefit to the PNP,” he said.
Finance Secretary Benjamin Diokno, meanwhile, said a pension reform bill is urgently needed to establish an adequate, fair, dignified, and financially sound pension system for soldiers, policemen, and other uniformed personnel.
Diokno issued the statement as the House of Representatives ad hoc committee held its first hearing on the military and uniformed personnel pension reform bill.
“The core objective of the government’s efforts to reform the pension system for military and uniformed personnel is to address the unsustainability and uncertainty of the current pension system,” Diokno said.
“Through these reforms, we can ensure the timely delivery of fair retirement benefits to men and women in service, while gradually lessening the strain on the government budget over time,” he said.
Unlike other pension systems, the MUP pension system does not require members to contribute to their pension. It, therefore, relies solely on the government.
Pension arrearage in the past few years alone amounted to P3.7 billion in 2021, P32.6 billion in 2022, P5.2 billion in 2023, and is projected at P4.8 billion for 2024.
“The goal is to craft a pension system that factors in the welfare of the military and uniformed personnel in active service and retirees while making sure it is sustainable and can withstand the test of time,” Diokno said.
“The emerging consensus provides a framework that balances the welfare of MUPs and the fiscal health of the MUP pension system,” he said.
He said the creation of the Military and Uniformed Personnel Trust Funds is one of the key reform proposals.
These pension funds will be funded through the military and uniformed personnel’s contributions, with a corresponding government share, and supplemented by the proceeds from the sale or lease of MUP assets, he said.
He also assured the soldiers, policemen, and other uniformed personnel that while the reform bill will require them to give a contribution, this is beneficial to them because it gives them full ownership and vested rights over the pension fund.