Government officials concerned are set to meet to fine tune proposals to overhaul the increasingly “unsustainable” pension system for the military and other uniformed personnel (MUP), after Finance Secretary Benjamin Diokno sounded the alarm over an imminent fiscal collapse stemming from the ballooning pension payments, with total payouts to MUP expected to breach the P1-trillion mark by 2035, from P213 billion this year.
“We are determined to come up with a reasonable proposal in consultation with the concerned agencies and stakeholders,” Diokno said. “Open dialogue will be key to coming up with a reasonable solution to this monumental problem and providing a level of predictability for current and future MUP pensioners.”
The current MUP pension system is funded solely by the government through internally generated revenues and borrowings, with no contribution at all from the pensioners themselves. MUP include the officers and enlisted personnel of the Armed Forces of the Philippines, Bureau of Jail Management and Penology, Bureau of Fire Protection, Philippines National Police, Public Safety College, Philippine Coast Guard, and the Bureau of Corrections.
According to Diokno, the amount received by retried MUP is 8.8 times higher than those under the Social Security System and Government Service Insurance System, where members make contributions toward their pensions.
The root of the matter can be traced back to the significant increase in the salaries of policemen and soldiers under the law signed by former President Rodrigo Duterte in 2018, where salaries across all ranks increased over two years by an average of 72.18 percent. With pensions linked to salaries, the payouts correspondingly surged, even if the MUP pension system had already been repeatedly identified as a fiscal risk.
The country is now saddled with a system where unfunded pension liabilities will rise progressively each year, projected to reach P252.5 billion in 2025 and up to a whopping P1.47 trillion by 2040. For comparison, the government’s total outstanding debt from both domestic and foreign lenders stood at P13.42 trillion as of the end of 2022.
Thus, the finance chief reiterated that reforming the MUP pension system was urgent to avoid a “fiscal collapse.”
The MUP pension system has already been identified in the past as a fiscal risk, and yet we had a government that somehow chose to ignore those risks just to score pogi points with uniformed personnel, committing an obscenely disproportionate chunk of funds to a very small percentage of the population. Now, that priorities have changed and the mess has to be undone, government once again changes direction in search of a solution.
Hopefully this time, our government officials decide to take a long term view that benefits the majority instead of the vested interests of a few.*
