Think about this: If, according to National Treasurer Rosalia de Leon, the unfunded liabilities of the Military and Uniformed Personnel (MUP) pension system currently amounts to around P9.6 trillion or 53.4 percent of the 2020 gross domestic product (GDP) and is expected to balloon further in the succeeding years, shouldn’t the government take decisive steps to remedy the situation?
That’s precisely the objective of a consultation roadshow organized by a technical working group (TWG) that will craft a measure that’s acceptable to stakeholders.
The consultation will gather inputs from officers and personnel of the armed forces, Philippine National Police, Bureau of Jail Management and Penology, Bureau of Fire Protection, Philippine Public Safety College, Philippine Coast Guard and the Bureau of Corrections.
This is a democratic way of addressing the issue.
The MUP pension system came under intense scrutiny after the International Monetary Fund (IMF) raised an alert on rising government liabilities to pensions of MUP, which the multilateral lender said might impact negatively on spending for social and infrastructure projects.
The IMF noted that MUP pensions are indexed to current wages and “kind of going up very fast,” and could “eat a large share of the national budget if it is not addressed and reformed.”
Finance Secretary Benjamin Diokno had even warned of a “fiscal collapse” resulting from the MUP pension, which is an “unfunded” liability that is expected to exceed P1 trillion by 2035 from P213 billion in 2023.
The finance chief pointed out the MUP is funded or shouldered fully by the government through borrowings, with no contribution from the pensioners themselves.
Hence, the Finance Department is pushing for a unified separation, retirement and pension system for the MUP that should apply to those in the active service and new entrants, and members across all MUP agencies.
The AFP has indicated that it is “amenable and open” to modifications in the pension system so long as these are fair and equitable.
But Department of National Defense (DND) Officer-in-charge Senior Undersecretary Carlito Galvez has said while the DND and AFP recognize the financial implications and fully support measures to address the current MUP pension system issues, lawmakers should also consider the morale and welfare of the soldiers.
Galvez lamented the discussion of proposals relating to retirement benefits, most especially the imposition of a pensionable age, has “already affected the morale and caused uneasiness not only from within the active ranks of the AFP, but even from our veterans and retirees.”
So how will this issue be resolved?
At this point, there’s no clear-cut solution but the two sides will have to find common ground sooner or later.