Gov’t to still shoulder bigger share in MUP pension fund in proposed reforms —DOF exec

As the Marcos administration moves forward with its plan to reform the military and uniformed personnel (MUP) pension system—including a proposal to impose mandatory contributions on all active and new entrants—the government will still shoulder a bigger share of the fund, a top official of the Department of Finance (DOF) said.

“We’d like to confirm that representatives of the economic team met with leaders of the House and we have an emerging consensus on the general terms,” DOF Undersecretary Alu Tioseco said at a weekly press chat with the Finance press corps.

“Definitely, we have an agreement as to the mandatory contributions,” Tioseco added.

Last week, Speaker Ferdinand Martin Romualdez said the economic team and the officials of the House of Representatives have reached a consensus on how to fund the reforms to the MUP pension system.

The DOF official explained that while the government proposes mandatory MUP contributions, “there will have to be a bigger government counterpart.”

“Definitely, there’s a bigger government share,” Tioseco said.

Under the current system, retired MUPs' pensions are fully funded by the national government. These are also automatically indexed to the prevailing salary of incumbent personnel of similar rank.

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

“So for every 5% that the MUPs put in, there will be a 16% government share. For every 7%, there’s 14%; and for 9%, there is 12%. We have to emphasize and to put on record that for every contribution of MUPs, the government will be saving with the MUPs,” Tioseco said.

“But for the percentage we still have to do the numbers,” she said.

“Also, some understanding on the indexation part but we have to double-check the numerical figure,” the DOF official said.

Also last week, Budget Secretary Amenah Pangandaman said the study on the MUP pension system would be finished within this month or in the next two weeks.

The reform of the MUP pension system was among the key measures cited by President Ferdinand "Bongbong" Marcos Jr. in his second State of the Nation Address on July 24.

Tioseco said that while the House leadership and the DOF reached a consensus for the reforms, these are only “general terms.”

“But on the specifics, the economic team will still sit down with the House and, of course, with other stakeholders because we have to run the numbers,” she said.

Finance Secretary Benjamin Diokno jad 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.

The Budget Department has earlier said that reforming the MUP pension system could free up P230 billion in the national budget, which may be used for infrastructure, livelihood, and other projects for the social sectors. 

Diokno had also warned that failure to address the ballooning cost of pensions for MUP retirees could lead to a “fiscal collapse.” — BM, GMA Integrated News