THE GOVERNMENT is proposing to allocate around P164 billion for the pension and gratuity benefits of military and uniformed personnel (MUP) next year, according to the Department of Budget and Management (DBM).
According to the 2024 National Expenditure Plan (NEP), next year’s proposed allocation is 3.5% higher than the funding for MUP benefits this year.
The Department of Finance (DoF) is currently working on reforming the MUP pension system on the instructions of President Ferdinand R. Marcos, Jr.
MUP pension reform is on the Legislative-Executive Development Advisory Council list of 20 priority measures targeted for approval by December.
Budget Secretary Amenah F. Pangandaman said that the government plans to maintain its intended MUP funding level for next year.
“Our budget is still the same, we will still provide the funds for the MUPs,” she said in a briefing on the People’s Television Network on Thursday.
Ms. Pangandaman said that even though a pension reform law may pass before the end of the year, she expects a transition period before the reforms kick in. The government hopes to gradually increase MUP members’ share of pension contributions.
“Even if we pass the law this year, the change will not be abrupt. There is a transition before they start to contribute and it can also be in tranches so it won’t be too heavy for our MUPs. Assuming everyone will contribute — again, it will depend on the bill that is being finalized now and it will go through the legislative process,” she added in a Viber message.
Under the NEP, the proposed allocation for pension benefits of MUPs and veterans is P140.68 billion, against this year’s budget of P139.5 billion.
The budget for MUP retirement gratuities and terminal leave is P23.41 billion, up from P18.87 billion for this year.
Currently, MUPs do not contribute to their pension fund. The funds are instead taken from the national budget.
Finance Secretary Benjamin E. Diokno has said that the latest version of the reform bill will require active-duty MUPs to contribute gradually while new recruits will pay the full premiums for their pension benefits. Retirees will not be required to contribute to their pensions.
The DoF is hoping to present a bill to Congress this month. It also expects the bill to be passed before the end of the year.
Bienvenido S. Oplas, Jr., president of a research consultancy and of the Minimal Government Thinkers think tank, said that the pension system should require contributions from new entrants and active-duty MUPs.
However, he said that retirees’ pensions should at least be taxed if they are not required to contribute.
“Retirees not contributing (is) wrong. (It’s) okay if their pensions will be taxed,” he said in a Viber message.
Accumulating pension liabilities may increase public debt by as much as 25% by 2030, according to a DoF estimate.
The Bureau of the Treasury also reported that unfunded pension liabilities have hit P9.6 trillion.
The MUP pension program covers members of the Armed Forces of the Philippines, Bureau of Jail Management and Penology, Bureau of Fire Protection, Philippine National Police, the Public Safety College, Coast Guard, and Bureau of Corrections. — Luisa Maria Jacinta C. Jocson