Military pension reform ‘not dead’ — DBM chief

The government is now crafting an improved version of the bill seeking to reform the pension system for military and uniformed personnel (MUP), Department of Budget and Management (DBM) Secretary Amenah F. Pangandaman said.

“MUP is not dead,” she said during the Fiscal Policy Conference on Friday last week.

“It’s a different version from what Secretary Ben [Diokno] has intended from the very beginning. Hopefully we’ll be able to come up with a nice version that will still be a bit better version than what was expected.”

Ms. Pangandaman made the statement after former Finance chief Benjamin E. Diokno said he does not think the current version of MUP reform is likely to make a difference.

“I think the military pension bill is dead… The measure that they’re coming up with is not what we wanted. It won’t make any much difference. In fact, it might worsen the situation,” Mr. Diokno said.

The Department of Finance (DoF) under Mr. Diokno had earlier pushed for a version of the bill that required contributions from all active personnel and new entrants and removed the full indexation of pensions.

Mr. Diokno had previously insisted that there is a need to overhaul the MUP pension system, noting that there is a risk of “fiscal collapse.”

Last year, the House of Representatives approved a version of the MUP reform bill, which does not require mandatory contributions from active personnel. The House version also provides for the automatic indexation of MUP pensions at 100% of the increase in the base pay of active personnel.

“Discussions are still ongoing, there will be updating. There is still no discussion but it will be dependent on the end of the 19^th Congress and beginning of the 20^th Congress,” Budget Undersecretary and Principal Economist Joselito R. Basilio told BusinessWorld on the sidelines of a forum.

In an interview with BusinessWorld, Finance Secretary Ralph G. Recto said “there is no update” on the MUP bill.

“Chances are there will be no bill on the MUP,” he said on the sidelines of a Senate budget hearing on Nov. 6.

Mr. Recto pushed for the changes in the pension scheme of the MUP but only for new entrants.

The Senate version of the MUP reform bill has been awaiting second reading approval since November 2023.

Senate Bill No. 2501 seeks to set monthly retirement pay at 50% of the base pay for the last position held by retired MUPs. It also requires new MUPs to contribute to the new pension fund system.

Under the Senate bill, members of the military would be required to contribute 7% of their base monthly salary, with the National Government contributing 14%.

The House version, on the other hand, sets a member contribution rate of 9% of monthly salary for new entrants and a 12% top-up form the government.

“The ideal is, or the standard is GSIS (Government Service Insurance System) — 9% and 11%. (The standard should be) 21-24% to make it sustainable and to have a good actuarial life,” Mr. Basilio said.

“That’s the idea. So, things would play around that. The contribution can be 5-4%.”

The MUP covers eight agencies such as the Armed Forces of the Philippines, the Philippine National Police, Philippine Coast Guard, Bureau of Fire Protection, Bureau of Jail Management and Penology, Bureau of Corrections, the National Mapping and Resource Information Authority and Philippine Veterans Affairs Office. – Aubrey Rose A. Inosante, Reporter