The good news is the national government is moving closer to a solution to the contentious issue of proposed reforms in the military and uniformed personnel pension system.
The Department of Finance had earlier noted the fiscal strain from rising pension costs for MUP, which the government shoulders through budget appropriation.
Malacañang therefore asked Congress to look for a legislative fix to the problem of ballooning pension costs for MUP.
Without any reform, the economic team had warned that pension payouts could hit the P1-trillion mark by 2035.
The DOF decided to first conduct consultations with representatives from agencies under the Department of National Defense and the Department of Interior and Local Government, including the Armed Forces of the Philippines and the Philippine National Police, to find a way out of contrasting opinions.
This was a step in the right direction.
In mid-August, a House ad hoc panel approved a substitute MUP Pension Reform bill ‘that appears to be acceptable to both the military and uniformed services and to the economic managers,” according to Rep. Joey Salceda, chair of the House committee on ways and means.
The approved bill consolidates the provisions of 12 other House bills suggesting changes to the MUP pension system.
Instead of leaving it up to the government to fund the pension for MUPs, it will now require mandatory contributions for active personnel and new entrants similar to other government workers.
Among the key provisions of the approved bill are the following:
One, retention of promotion to one rank higher upon retirement.
Two, uniform 90 percent of longevity pay plus base pay for lump sum benefit upon separation below 20 years in service, which will create a new benefit for the PNP which currently does not have it.
Three, uniform multiple of 1.0 x Years of Service for lump sum benefit.
Four, guaranteed 3 percent annual increase in salaries for 10 years.
Five, indexation of pensions to 50 percent of adjustment in pay.
And six, creation of a window for indigent pensioners under the trust funds.
The approved bill also provides for a phased- contribution scheme of 5 percent of salaries for the first three years, 7 percent for the next three years, 9 percent thereafter for active personnel; 9 percent immediately for new entrants, but including a larger government counterpart to complete the 21 percent contribution.
Rep. Salceda believes 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.”
But will the Senate agree with him?