Salceda: DND proposal for full indexation of MUP pension will mean P1.2-T more expenses

The Department of National Defense (DND)’s proposal to allow full indexation of the military and uniformed personnel (MUP) pension corresponding to their rank upon retirement under the proposed MUP pension reform bill would mean additional P1.2 trillion expenses for the government, House ways and means panel chairperson Joey Salceda said.

Salceda, in a statement, said such proposal by Defense Secretary Gilbert Teodoro of full indexation will entail additional P1.2 trillion to the already P2.2 trillion worth of actuarial reserve deficiency for MUP pension under the House Ad Hoc Committee-approved version of the proposed MUP pension reform bill which provides for 50% indexation, aside from mandatory contribution for active MUPs for their pension.

“We are still clarifying with the DOF (Department of Finance) and the DND exactly what the request is, because we are hearing clarifications that they just want to ensure that those who have given 20 years of service or more will not pay contributions or be subject to lower indexation. Our initial impression from the statement is that they don’t want anybody from the active service to pay any contribution or to give up any amount of indexation,” Salceda said.

Under the current system, MUPs do not contribute for their pension since their pension funds are shouldered by the national government under the annual national budget.

Given the situation, Salceda stressed that the MUP pension reform bill is being pursued to ensure that the pension system is substantially preserved in a way that can still be guaranteed by the State.

“[We want] a reform that is not too expensive, but also not too disruptive. There could be some pushback from the DOF and the economic managers on the Teodoro proposal. So, we hope that within the executive, they will sort their position out,” Salceda pointed out.

“I need a figure that still allows me to protect the reform’s three guarantees: Guaranteed salary increase, guaranteed pension increase, and guaranteed funding source. So, moving forward, any additional proposals should bear the costs in mind,” Salceda added.

Salceda, however, said he is open to accommodating Teodoro’s request.

“As Chair of the Ad Hoc Committee, I would like to assure the Secretary that his requests are acceptable. We will adopt the Teodoro proposal of indexation for all retired and retireables and a transitioned contribution scheme,” Salceda said.

“I will heed the request for full indexation for those who are retired and due for retirement. My job is to get a bill that will work fiscally, but is also acceptable to all stakeholders. So, of course, if Secretary Teodoro has major concerns, part of my job is to accommodate. Not without DOF concerns, of course, but that’s for them to settle in the Cabinet,” Salceda added.

The Finance department earlier said that limiting MUP pension contribution to new entrants would mean that it would take 60 years before the MUP pension reaches a sustainable level. —KG, GMA Integrated News