Senate bill proposes 7%, 9% mandatory contribution for new MUP entrants

A joint Senate committee has recommended mandatory contributions for new entrants in the military and uniformed services.

The Senate Committees on National Defense and Security, Peace, Unification and Reconciliation; on Government Corporations and Public Enterprises; on Ways and Means; and on Finance proposed this under Committee Report 173 as contained in Senate Bill (SB) 2501.

Under SB 2501, new entrants in the military service will contribute 7% of monthly base pay and longevity pay with 14% from government share.

For uniformed services, new entrants in the Philippine National Police, Philippine Coast Guard, Bureau of Fire Protection, Bureau of Jail Management and Penology, Bureau of Corrections, and the Hydrography Branch of the National Mapping and Resource Information Authority (NAMRIA) will pay 9% of their monthly base pay and longevity pay with 12% government share.

A trust fund will be established for the Armed Forces of the Philippines (AFP) and another for uniformed services, both will be managed by the Government Service Insurance System (GSIS).

The bill proposed that both trust funds will be distinct and would not be co-mingled with the GSIS funds. The state pension corporation will not be allowed to advance funds and grant any form of loans to the Trust Fund Committees.

SB 2501 sets the retirement age for uniformed services at 57 years old.

The monthly retirement pay under the bill is set at 50% of the base pay and longevity pay of the permanent grade last held by the personnel in case of 20 years in active duty, increasing by 2.5% for every year of active duty rendered beyond 20 years to a maximum of 90% for 36 years of active duty and over.

For MUP — or military and uniformed personnel — who is killed in action or wounded in action resulting in total permanent disability, the retirement pay shall be computed at 90% of the month base and longevity pay of the retirement grade of the personnel regardless of years in active duty.

The increase to a maximum 90% rate of retirement pay for having compulsorily retired by reason of having served 36 years of active duty and over and having been declared compulsorily retired by reason of total disability will also benefit active members.

Under the bill, personnel can choose lump sum release of benefits equivalent to 36 months and monthly retirement benefits three years after the release of the lump sum.

MUP can also receive benefits through direct pension or monthly retirement benefits as they accrue.

SB 2501 also provides for separation pay for those who separate or resign from service at the rate equivalent to one-month base pay and longevity pay of the permanent grade held at the time of separation for every year of active duty.

However, the personnel must have rendered at least nine years of active duty prior to resignation.

Annual adjustment in the base pay of active MUP of three percent for the next ten years upon the effectivity of the proposed law is provided under the Senate bill.

Issuance of medical insurance is also provided to the retired MUP who entered the service after the effectivity of the proposed law upon their compulsory retirement.

Consulted with Executive department

In an ambush interview, Senator Ronald “Bato” dela Rosa, a former PNP chief, said the Senate’s version of the bill was consulted with the Executive department.

“So far, okay naman maganda naman ‘yung version na in-adopt ni Senator Jinggoy. May consensus ‘yon, according to the Malacanang economic team. It is a consensus bill meaning walang nag-object sa AFP at tyaka sa uniformed personnel. Lahat ng MUP inikot daw nila. Umikot sila,” Dela Rosa said.

(The version adopted by Senator Jinggoy Estrada is good because it has the consensus of the economic team. It is a consensus bill which means that no one from the AFP and the uniformed personnel objected to the bill. They said all the MUP were consulted.)

During the plenary deliberations on the Department of National Defense’s budget for 2024, the agency said that new entrants in the AFP should be excluded from the proposed mandatory contribution for MUP.

Dela Rosa, who sponsored the DND budget at the Senate, said that while the proposal of the agency was better because it excludes new entrants in the military service, the Senate bill ensures equal treatment for both soldiers and uniformed personnel.

“Magiging unfair kung AFP lang ang magiging non-contributory, ang kanilang new entrants tapos don sa ibang uniformed personnel magko-contribute. So baka magkakaroon ng samaan ng loob…Dapat may equality sa batas,” he said.

(It would be unfair if the new entrants from the AFP will not contribute while personnel from other uniformed service will contribute. That might cause unnecessary drama. There should be equality among them under the law.)

Continue reforming the MUP pension system

Defense Secretary Gilbert Teodoro Jr earlier said President Ferdinand “Bongbong” Marcos Jr.’s first marching order was to continue to reform the MUP pension system.

In May, Marcos pushed for “self-regenerating” pension plans for both the AFP and the Philippine National Police (PNP) in an effort to avoid a scenario in which the funds would be depleted.

The economic team, headed by Finance Secretary Benjamin Diokno, had warned of the consequences of the pension payments, with the total yearly payouts expected to hit the P1-trillion mark by 2035 from P213 billion in 2023.

Under its proposal, a technical working group led by the DOF called for MUP in active service to contribute 5% of their monthly pay, and new entrants to contribute 9% of their basic salary and longevity pay.

In September, the House of Representatives approved on third and final reading a bill reforming the MUP pension system. The measure proposed that new MUP entrants will have to give a mandatory monthly contribution, which is 9% of their salary, with the national government contributing 12%. —KBK/RSJ, GMA Integrated News