Unfunded liabilities under MUP pension system half of PH GDP, says Diokno

Finance Secretary Benjamin Diokno said the unfunded liabilities under the current pension system for military and uniformed personnel (MUP) is already worth half of the country’s economy, as he emphasized the need for its reform.

“There is a study in 2019, the unfunded liability of the military pension is P9 trillion,” Diokno said in his weekly press chat.

“It’s about half of our GDP (gross domestic product). Ganun kalala ang problema natin (That’s how huge our problem is),” he said.

Last week, President Ferdinand Marcos Jr. said he is pushing for a “self-regenerating” pension plans for the personnel of the Armed Forces of the Philippines and the Philippine National Police.

In March, Diokno warned that failure to address the ballooning cost of pensions for retirees could lead to a “fiscal collapse.”

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

“In other words, if you are a retiree [and] if you are a general getting X amount of money, if the salary of the incumbent is doubled, you get your pension doubled also,” Diokno earlier said.

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 for their pension fund similar to pensioners of the Government Service Insurance System. —KBK, GMA Integrated News