Military, uniformed personnel pension reform bill filed in House

From the Philippine Information Agency (Feb 3, 2021): Military, uniformed personnel pension reform bill filed in House (By Filane Mikee Cervantes)

Albay Rep. Joey Salceda (File photo)

A measure providing for a unified system for separation, retirement, and pension of military and uniformed services personnel has been filed at the House of Representatives.

Albay Rep. Joey Salceda filed on Feb. 1 House Bill 8593, or the proposed “Unified Military and Uniformed Services Personnel Separation, Retirement, and Pension Act,” to manage the escalating pension costs of military and uniformed personnel (MUP).

Salceda said pension liabilities for current active personnel already runs to PHP9.6 trillion, according to a study conducted by the Government Service Insurance System (GSIS).

“PHP9.6 trillion is half of our GDP (gross domestic product). Any pension liability that covers half of your economy is trouble. And the problem will only get bigger if we don’t solve it now,” Salceda said. “The problem with the pension system for MUP is that there is no sharing between employee and the government, so all liabilities are current. There is no seed fund to grow.”

Salceda said that unlike any other pension system, where contributions from both employer and employee are managed in a pension fund, and where the liabilities are deferred, the MUP pension system is “essentially no different from for-life government salary”.

“There is no pension fund to speak of. It’s always a budget item. It will eventually eat up the budget unless we can find ways to defer the liabilities and keep some funds in trust,” Salceda said.

He explained that MUP are entitled to retirement pension starting at 20 years of service before reaching retirement age.

“We recognize the bravery of servicemen and servicewomen in defending the Constitution and the people. In doing so, what we must not do, however, is to compromise the same nation they are defending by risking its fiscal situation,” he said.

Under the bill, the government will impose mandatory contributions as follows: first three years: 5 percent employee, 16 percent National Government (NG); next three years: 7 percent employee, 14 percent NG; years thereafter: 9 percent employee, 12 percent NG, in parity with other GSIS pensioners.

The bill will also introduce pension indexation, or the discontinuation of automatic indexation, which shall be reviewed periodically and can be adjusted to a maximum of 1.5 percent.

The proposed law sets the MUP pensionable age at 56 years, regardless of years of service.

It seeks to establish a new entity to be the administrator of the MUP fund while GSIS will act as its fund manager.

The bill also identifies other sources of funding for MUP pension, including proceeds from the sale/lease of assets of the MUP and from NG assets from Manila Bay reclamation, and other identified assets.

“The leadership of the armed services supports this reform, because they know that the problem cannot be solved unless we take bold steps. I took it on because the only way to save MUP pension is to keep it sustainable. It’s tough love, but it’s love for our servicemen and servicewomen,” Salceda said.

https://www.pna.gov.ph/articles/1129443