Gibo concerned over proposed mandatory pension contributions for soldiers

Defense Secretary Gilberto Teodoro Jr. has raised concern over a bill recently approved by an ad hoc committee at the House of Representatives making it mandatory for military and uniformed personnel (MUP) to contribute to their pension.

"I do not subscribe to the proposed blanket mandatory contributions for military personnel, especially for those who have already completed at least 20 years of active service," Teodoro said in a statement.

He said the pension reform plan envisioned by the president is one which will have the least impact on military personnel in active service.

"The imposition of mandatory monthly contributions without a transition phase will definitely have an impact on our soldiers," he said.

The substitute bill approved by the House panel on Tuesday will require those in active service to contribute 5% of their base and longevity pay during the first to third year of the MUP pension reform implementation, 7% on the fourth to sixth year, and 9% for seventh year onwards.

The government contribution for pension of those in active service will be at 16% during the first to third year, 14% on the fourth to sixth year and 12% for seventh year onwards.

New entrants, meanwhile, will contribute 9% of their their base and longevity pay for their pension with a government contribution of 12%.

The Defense chief also stood pat that the soldiers' pensions and entitlements, including 100% automatic indexation, shall remain unchanged.

"Ensuring the non-diminution of their retirement benefits is the least we can do in recognition of their sacrifices to the country," he said.

Teodoro pointed out that members of the Armed Forces of the Philippines should be distinguished from all other uniformed personnel.

"The AFP performs a sui generis mandate emanating from the 1987 Constitution: to secure the sovereignty of the Philippines and the integrity of our national territory," he said.

"Despite wearing uniforms and ranks similar to that of other uniformed personnel, there is no uniformity in terms of the nature of their duties and responsibilities. The risks they face and the multifarious roles they play in nation-building and in times of crisis are well known," he added.

Teodoro said soldiers do not receive additional financial support from local government units, unlike some of the other services. 

"The AFP continues to obtain the highest approval, satisfaction, and trust ratings. Adding to their burdens will only serve to distract them from focusing on their crucial mission," he said.

Earlier, Finance Secretary Benjamin Diokno warned the next administration will be faced with a "huge problem" should the proposed reforms on the pension system fail to be passed into law.

Diokno said that with the pension system having no contributions from MUPs, liabilities have already been earlier estimated at P9 trillion versus the country’s gross domestic product (GDP) of around P20 trillion.

Under the 2024 NEP, the government is proposing to allocate P164 billion for the MUP pension, reflecting a 3.5% increase from the funding for benefits this year. This is fully funded by the government, without any direct contributions from the MUPs themselves.

“The pension system that is for the military is not a real pension system in the following sense — there are no contributors,” Diokno said.

“A pension system is where the beneficiaries of the pension system contribute to the system and there is a government counterpart, okay, but in this particular sense, there is no contribution in the part of the beneficiaries, and we only appropriate it annually,” he added.—LDF, GMA Integrated News