Active, new personnel to contribute to military pension system —DBM

The Department of Budget and Management (DBM) is seeking a mandate for uniformed personnel to contribute to their pension fund as part of reforms being studied to address ballooning pension of the military and make it sustainable.

Budget Secretary Benjamin Diokno said Wednesday that under the military pension reform measure that the DBM is currently studying, uniformed personnel will be asked to contribute to the pension system.

“But they will get the same benefits under the old system, where the pension is indexed to the salary of the incumbent,” Diokno said during a breakfast forum in Manila.

The budget chief earlier blamed the automatic indexation system for the ballooning costs of the military pension fund.

Under the automatic indexation system, the amount of a retiree’s pension is automatically adjusted to match the prevailing salary of incumbent personnel of similar rank.

“For the new entrants they will be under a new set of rules,” Diokno said, noting that once the pension reform is in place those who will enter the military will be tasked to contribute to their pension fund.

The Budget chief said, however, new personnel will no longer be under the automatic indexation system.

NEW GSIS BRANCH

Diokno said the Government Service and Insurance System (GSIS) will take over management of the military pension fund. “It will be run by a branch of GSIS.”
Creating a separate GSIS arm for the military pension fund makes the existing pension system for civilian employees distinct.

Asked if the uniformed personnel will have contributions on a par with the GSIS members, Diokno said the DBM and the GSIS is still studying such details.

GSIS members pay a monthly premium of 21 percent of the gross salary, of which the member shoulders 9 percent and the employer pays 12 percent.

For retirees under the old system, Diokno said the government will still honor and implement the automatic indexation system once reforms in the military pension fund are in place.

“We will continue the old system for the current retirees because we have to honor the contract,” the Budget chief said.

Diokno noted the GSIS has completed the initial actuarial study on taking over the military pension fund.

The GSIS estimated earlier that it needs around P7 trillion for the takeover.

Economic managers are considering leasing military assets to cover the funding requirement. —VDS, GMA News