Police, military pension reform to free up P230 billion —DBM

The proposed reforms in the pension system for military and other uniformed personnel (MUP) could free up P230 billion which may be used for infrastructure, livelihood, and other projects for the social sectors, Budget Secretary Amenah Pangandaman said on Wednesday.

At the weekly Kapihan sa Manila Bay news forum, Pangandaman pointed out that the MUP pension was allocated P230 billion annually under the national budget.

“So if we free up that amount we’d be able to fund more roads, more school buildings,  more hospitals, more livelihood projects for our social sectors,” Pangandaman said.

The administration is pushing to reform the MUP pension system by removing automatic indexation among pensioners and the imposition of mandatory contributions to all active and new MUP entrants.

Finance Secretary Benjamin Diokno earlier warned that failure to address the ballooning cost of pensions for retirees could lead to a “fiscal collapse.”

Diokno said that the unfunded liabilities under the current pension system for MUP were already worth half of the country’s economy or around P9 trillion.

Under the current system, the pension for retired MUPs is fully funded by the national government. It is also automatically indexed to the prevailing salary of incumbent personnel of similar rank.

Proposals to reform the MUP pension system are being discussed in the Senate.

Under the recommendations of the Department of Finance, the reform should apply to all active personnel and new entrants and should be required to contribute to their pension fund similar to pensioners of the Government Service Insurance System.

Senators Ronald dela Rosa and Robin Padilla had warned of the mass exodus should the proposed MUP pension reform be implemented.

Pangandaman said the government is conducting a series of consultations to craft “the right bill” it will propose to Congress.

“That’s the idea, to let them contribute to ease up our fiscal space,” she said.

President Ferdinand "Bongbong" Marcos Jr. said multisectoral discussions are ongoing regarding the pension system of the country's security forces.

Marcos said he wanted the AFP and the PNP to have a self-sustaining pension plan to avoid a scenario where the funds would be depleted. —NB, GMA Integrated News