House passes MUP pension bill, putting ball in Senate’s court

From Rappler (Sep 26, 2023): House passes MUP pension bill, putting ball in Senate’s court (By DWIGHT DE LEON)

The proposal seeks to address perennial issues hounding the current military and uniformed personnel pension system, which has strained government finances over the years

MANILA, Philippines – The House of Representatives passed on final reading a bill that seeks to reform the country’s generous pension system for military and uniformed personnel (MUP).

President Ferdinand Marcos Jr.’s priority measure cleared the chamber on Tuesday midnight, September 26, after 272 lawmakers voted to pass the the MUP Pension System Act. Four House members opposed the measure, while one other abstained from the vote.

House Bill No. 8969 seeks to address perennial issues concerning the current pension system, which has strained government finances over the years.

But the measure that passed the chamber has been watered down compared to the original proposal, which sought to include present retirees and active MUPs in the reforms.
What the bill contains

Under the approved measure, only new entrants will be required to contribute 9% of their monthly compensation to the fund, since proponents already dropped initial proposals to compel MUP in active service to contribute as well.

The pension of retired MUPs are automatically indexed at a full rate, while active members are guaranteed of a salary increase of 3% per annum for the next 10 years.

Two trust funds would be created, one for the Armed Forces of the Philippines (AFP), and another for uniformed personnel, composed of the Philippine National Police (PNP), Philippine Coast Guard (PCG), Bureau of Fire Protection (BFP), Bureau of Jail Management and Penology (BJMP), Bureau of Corrections (BuCor), and commissioned officers of the Hydrography Branch of the National Mapping and Resource Information Authority (NAMRIA).

Funding sources would include capitalization, mandatory contributions, savings of the national government, unprogrammed appropriations, and investment income from the trust funds, among others.

The trust funds would be managed by the MUP Trust Fund Committee, chaired by the Finance Secretary.

MUST READ: FAST FACTS: What’s in the MUP Pension System Act proposed in the House?

The bill has around 30 main authors, but listed first are Speaker Martin Romualdez, Tingog Representative Yedda Romualdez, Tingog Representative Jude Acidre, Majority Leader Mannix Dalipe, and Albay 2nd District Representative Joey Salceda.

Voting against the measure, Kabataan Representative Raoul Manuel criticized the annual salary increase for MUPs under the bill.

“In exempting active MUPs from contributing to the pension funds, it will too burdensome for the government before the trust funds become self-sustaining,” he added.
Long and winding road

Attempts to review and reform the military pension system go all the way back to early 2000s, under the administration of former president Gloria Macapagal-Arroyo.

But these efforts failed to pick up steam due to serious apprehensions from military and uniformed personnel.

The existing pension system – described by Finance Secretary Benjamin Diokno as the most generous in the world – has widened the cracks in government coffers, putting the Philippines on the brink of fiscal collapse.

Every year, the government digs deep into its pockets: in 2022, military pension spending reached P164 billion, surpassing maintenance and other operating expenses as well as capital outlays.

MUST READ: EXPLAINER: How generous military pension is pushing Philippines to fiscal collapse

Diokno has said Marcos is willing to spend his political capital to get the bill passed, and by July, his administration officially listed military pension reform as a priority measure that he wants to sign into law before end of the year.

In August, Speaker Romualdez formed an ad hoc panel tasked to consolidate numerous proposals on the subject.

The bill passed by the committee is different from the one that hurdled the House, because the latter accommodated numerous suggestions raised by Defense Secretary Gilbert Teodoro Jr., who opposed blanket mandatory contributions for mandatory personnel, and tweaks to indexation.

The approved bill will be transmitted to the Senate, which now has the ball on Marcos’ priority meausre.

Senate records show three measures seeking to reform the MUP pension system are pending in the committee level.

These bills are filed by senators Jinggoy Estrada, Win Gatchalian, and Bong Revilla.

https://www.rappler.com/nation/house-representatives-passes-military-uniformed-personnel-pension-system-reform-september-2023/