DOF out to convince pension reform holdouts
MANILA -The Marcos administrations’ economic team led by Department of Finance (DOF) is revving up consultations with uniformed services on revamping their system amid efforts to complement revenue-generating measures with reforms on the spending side.
Finance officials and even some lawmakers have warned that the current pension system for military and uniformed personnel (MUP) is financially unsustainable, mainly because it depends on the national budget rather than on contributions.
Based on an actuarial study done in 2019 by the Government Service Insurance System, it is estimated that the government must spend P848.39 billion yearly for the next 20 years to finance the current MUP pension system.
The economic team said reforms were needed to make the system not only fiscally sustainable for the national government but also to build a strong social protection system for current retirees and future MUP alike.
Unsustainable liabilities
The argument of reform proponents is that if the huge and rising liabilities of the current MUP pension system is not addressed, securing sufficient resources to provide for the benefits of future pensioners and their dependents will be “extremely challenging.”
Thus, they propose a unified separation, retirement and pension system for the MUP, which should apply to those in the active service and new entrants, and members across all MUP agencies.
Article continues after this advertisementBeing pushed in particular are mandatory contributions to the system as well as stopping the indexation of monthly pensions to current wage levels.
Article continues after this advertisementGenerous benefits
Under the present system, pensioners receive their benefits based on present pay levels regardless of whether they retired years or decades ago.
Also being proposed are increasing the disability pensions on top of their other benefits, in recognition of the unique hazards and risks that MUPs assume in the performance of their duties.
Many of these proposals are hard to accept for those affected and so the economic team has embarked on a consultation roadshow in order “to balance the creation of a fair system while preserving the country’s overall fiscal health.”
On May 26, the consultation team met with around 200 Philippine Air Force members in person, and 600 others remotely.
The team consisted of Finance Undersecretary Maria Cielo Magno and representatives from the Department of Budget and Management and the office of Sen. Jinggoy Estrada.
Regarding contributions, Magno asked those who attended the dialog to regard this as “like forced savings on [your] part so that we will have something ready upon retirement.”
According to the DOF, an Armed Forces of the Philippines-wide survey is also being conducted to help the economic team craft a balanced proposal.
The team also has a lineup of consultations with the AFP’s Presidential Security Group, Health Service Command, Philippine Navy, Philippine Army, Visayas Command, Eastern and Western Mindanao Commands, Western Command, Philippine Military Academy and Northern and Southern Luzon Commands.
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