Bill seeking reforms in MUP pension system OK’d

by Edu Punay (The Philippine Star), 4 Jun 2021

MANILA, Philippines — A House ad hoc committee has approved a bill seeking to reform the pension system for military and other uniformed personnel (MUP).

In a hearing earlier this week, the panel chaired by Albay Rep. Joey Salceda decided to approve the substitute bill revising the MUP pension system that proponents said could face an “existential threat” due to unfunded liability amounting to P9.6 trillion.

The proposed measure seeks to remove the automatic indexation system that pegs the amount of pension received by retirees to the current salaries of active personnel.

Salceda, chair of House ways and means committee, explained that scrapping indexation would automatically reduce two-thirds or P6.6 trillion from the total unfunded liability.

He revealed that another P589 billion could also be slashed from the liability if MUPs would be required to pay for their pensions.

But the panel opted to drop such an option and just go with the scrapping of indexation scheme.

“If you really give up indexation and the eligibility to receive a pension after 20 years, that solves the whole problem. The contribution is actually just a P589-billion (reduction) in the entire period. It’s very small,” he stressed.

This means the bill proposes to retain the status quo where MUPs do not pay for their pensions.

The measure also includes a provision of Cost-of-Living Adjustment (COLA) to ensure that monthly pensions remain on track with changes in prices and the adjustment of pensionable age to 60 years old.

In the current system, MUPs get a higher rank upon retirement at 56 years old or when MUPs reach at least 20 years of service, and their pensions are pegged to the current salaries of active personnel.

Salceda assured MUP pensioners that no cuts will be made to their present pensions.