THE HOUSE of Representatives approved on third and final reading a bill seeking to reform the pension system for military and uniformed personnel (MUP), but without requiring mandatory contributions from active personnel.
Lawmakers voted on House Bill No. 8969 or the Military and Uniformed Personnel Pension System Act past midnight on Tuesday, with 272 in favor, four against and one abstention.
The House-approved version requires only new entrants to contribute to the pension fund. New entrants will have to contribute 9% of their monthly salary as their share, while the National Government (NG) will provide 12%.
“The share of the MUP and the NG may be reduced by the Development Budget Coordination Committee (DBCC) due to adverse fiscal and economic conditions of fiscal constraints of the NG,” the bill stated.
The bill also provides for the automatic indexation of MUP pensions at 100% of the increase in the base pay of active personnel. However, the President is authorized to adjust the pension and survivorship pension at lower rates “due to adverse fiscal or economic conditions,” as certified by the DBCC.
Lawmakers had amended the bill during the plenary last week after Defense Secretary Gilberto C. Teodoro, Jr. objected to the committee report that had capped the indexation of the MUP pension at 50% and required all active personnel and new entrants to contribute to the pension fund.
“The MUP agencies are already very happy with this reform which also significantly improves our fiscal position. It also makes the fiscal risks of the MUP pension system very predictable,” said Albay Rep. Jose Ma. Clemente S. Salceda, who chaired the ad hoc committee on the MUP pension, in a statement.
However, Albay Rep. Edcel C. Lagman, who voted against the bill, said military and uniformed personnel should not be exempted from making contributions to their pension fund.
“It is not a valid reason to exempt MUPs from contribution because they die in line of duty because more employees in the civilian service and the private sector die of work-related causes. Moreover, if military morale matters, so does civilian morale. Why must civilian employees pay through their taxes the pension benefits of MUP retirees,” Mr. Lagman said.
Party-list Rep. Raoul Danniel A. Manuel, who also voted against the bill, said exempting active MUPs from contributing to the pension will be “too burdensome” for the government.
The Department of Finance (DoF) had earlier pushed for a version of the bill that required contributions from all active personnel and new entrants, and removed the full indexation of pensions.
Finance Secretary Benjamin E. Diokno previously insisted that there is a need to overhaul the MUP pension system, noting that there is a risk of “fiscal collapse.”
“It will not qualify as a reform if indexation will continue and the active members will not contribute. We have to reduce the fiscal impact of the MUP pension program and the contribution of active members will greatly help in managing that,” Mr. Diokno said last month.
At present, all MUPs do not contribute to their pension fund, which is fully funded by the National Government.
Under the measure, all MUPs would be guaranteed a 3% annual adjustment of their base pay over 10 years.
The bill also creates the MUP trust funds, composed of the Armed Forces of the Philippines (AFP) Trust Fund and the Uniformed Personnel Services Trust Fund.
The measure also seeks to include residual assets of the AFP-Retirement and Separation Benefits System (RSBS) as one of the funding sources for the AFP Trust Fund.
The MUP pension program covers members of the AFP, Philippine National Police, the Bureau of Jail Management and Penology, Bureau of Fire Protection, Philippine Public Safety College, the Philippine Coast Guard, and Bureau of Corrections.
The bill is part of the Legislative-Executive Development Advisory Council’s list of 20 priority measures that Congress committed to approve by December. — Beatriz Marie D. Cruz