The House of Representatives on Monday opened plenary deliberations on House Bill 8969, or the proposed Military and Uniformed Personnel (MUP) Pension System Act–a priority bill of the Marcos administration.
In his sponsorship bill, Ad Hoc Committee on the MUP Pension System Chairman and Albay Rep. Joey Sarte Salceda said the lower chamber is committed to grant President Ferdinand Marcos Jr.’s request to Congress for a MUP pension system that is “fully functional and financially sustainable” and that guarantees “that no effects are felt by those in the uniformed services.”
“Your Honors, the fiscal sustainability of the current MUP pension system has long been an outstanding issue. The annual appropriations allocated to the current MUP pension system have significantly increased over the years. From a pension fund appropriation of P64.2 billion in 2014, the budget has increased to P128.6 billion in 2023, a growth equivalent to 101%,” said Salceda in his speech.
Salceda said the pension system is indexed to the salary of active personnel, contrary to the common practice of using the highest salary as the basis for retirement or the Government Service and Insurance System practice of using the average monthly salary received by a government employee during the last three years immediately preceding retirement.
“Indexation became more unsustainable in 2018, when then President Rodrigo Duterte approved the increase in base salaries of active personnel, which doubled both MUP salaries and retirees’ pensions,” he added.
However, Salceda admitted the impact of the automatic salary indexation was minimized starting in 2020 since Presidents Duterte and Marcos have not increased MUP salaries.
“The average annual salary increase was reduced to a more sustainable 8.47 percent and will improve to around 6.5 percent until the end of President Marcos’s term if there is no MUP salary hike,” he said.
Consequently, Salceda said the estimates of actuarial reserve deficiency for the MUP pension should also decline from the original P9.6 trillion.
“From 13 bills seeking reform of the MUP pension this 19th Congress, the Ad Hoc Committee on the MUP Pension System has delivered a more robust MUP pension reform proposal through House Bill No. 8969 to ensure the strength of our country’s fiscal health as well as the MUP pension system’s sustainability,” he said.
“We pushed for this pension reform in high regard for the services and sacrifices of our military and uniformed personnel to our nation. Together, let us push for a sustainable fiscal framework to ensure funding for the pension of our heroes,” Salceda added.
Iloilo Rep. Raul Tupas, also a sponsor of the bill, assured that the ad hoc committee worked diligently to come up with a bill that is “least disruptive, fair, and viable to pave the way for a sustainable pension system for our MUPs.”
“Let me reassure our MUPs that Congress recognizes the vital role that you perform in providing internal and external security, promoting peace and order, and ensuring public safety,” he added.
House Committee on Public Order and Safety Chairman Dan Fernandez, also a sponsor of the bill, said the proposal seeks to establish a viable funding source for the pension requirements of the MUPs, which stand at P158.4 billion for fiscal year 2023 and are estimated to increase to P257 billion for fiscal year 2024.
“It also seeks to ensure the sustainability of the pension and other benefits of military and uniformed personnel by creating a fiscal framework that fully supports its funding requirements,” he added.
Meanwhile, House Bill No. 8969 guarantees that:
- The salary increases of MUPs of 3% annually are guaranteed for 10 years.
- The mandatory retirement age was adjusted from 56 to 57 years old.
- There is a gradual shift to the contributory scheme to augment the funding sources of the MUP pension system.
- Two separate trust funds will be established: the Armed Forces of the Philippines Trust Fund and the Uniformed Personnel Services Trust Fund.
- The MUP Trust Fund Committee will be created to manage the MUP trust funds, with the Bureau of Treasury as the Secretariat of the Committee and the Government Service and Insurance System as the fund manager.
