President Approves Reforms to Military Pension System to Avoid Fiscal Collapse, Finance Secretary Says

 President Ferdinand Marcos Jr. has given the green light to proposed reforms on the military uniformed personnel (MUP) pension system to prevent a potential fiscal collapse, according to Finance Secretary Benjamin Diokno. The suggested adjustments entail the receipt of pension at age 57, obligatory contributions for active personnel and new recruits, removal of automatic indexation of pension to the salary of active personnel of a similar rank, and application of the reform to all active personnel and new recruits. Diokno stressed the urgency of these adjustments, warning that the military budget would eventually fall to barely a third or fourth of the pension fund's costs. He added that because the program has no minimum pension age, retirees may begin receiving pensions as early as 40 years old, even if they enlisted in the uniformed military when they were young. Diokno suggests that required contributions be imposed for current personnel and new entrants, comparable to the GSIS pensioners, to maintain the fund's liquidity. Department of National Defense Senior Undersecretary Carlito Galvez Jr. and Interior and Local Government Secretary Benjamin "Benhur" Abalos Jr. have both expressed their support for the proposed reforms. The MUP pension system covers retirees from several agencies, including the Philippine National Police, the Philippine Coast Guard, and the Bureau of Corrections.

During a media briefing in Malacañang, Diokno stressed that the current situation is not sustainable and warned of a possible fiscal collapse if the issue is not addressed. He also acknowledged that military personnel typically live longer than civilians, with some reaching the age of 90. As a result, if they retire at age 40, they could receive pensions for up to 50 years, which is a considerable financial burden on the government.

The suggested changes are meant to allay these worries and guarantee the pension system's long-term stability. The revisions would also include a minimum pensionable age, which would be set at 60 years old, in addition to the previously mentioned modifications. This would assist in lowering the costs of the pension fund and ensuring its viability for upcoming military personnel generations.

Photo: RTVM

Diokno stated that the proposed changes had received the approval of President Ferdinand Marcos Jr. and would be presented to Congress for further discussion. He also expressed his appreciation for the support of DND Senior Undersecretary Carlito Galvez Jr. and Interior and Local Government Secretary Benjamin "Benhur" Abalos Jr.

Some government organizations, including the Philippine National Police, the Philippine Coast Guard, and the Bureau of Prisons, are covered by the MUP pension scheme. All active employees and new hires within these agencies, as well as former military members who are currently receiving pensions, are meant to gain from the proposed reforms.

The reforms to the MUP pension system are a critical step towards ensuring the long-term sustainability of the fund and preventing a potential fiscal collapse. The proposed changes, including the introduction of a minimum pensionable age and mandatory contributions for active personnel and new entrants, will help to reduce the burden on the government and ensure that the pension system remains viable for future generations of military personnel.

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Resources:
Marcos backs move to reform pension system (msn.com)