MANILA — The Department of National Defense (DND) on Monday said it was eyeing "phased" mandatory contributions under the proposed military pension reform.

The current military pension system is fully funded by the national government, with the retirees not paying any contribution.

"The transition from non-contributory to contributory shall be phased and not implemented in one go," Defense Secretary Gibo Teodoro told ANC's "Headstart."

"The contributor...shall feel the least financial impact as possible," he added.

Finance Secretary Benjamin Diokno earlier called for reforms on the military and uniformed personnel's pension, which he said was unsustainable and could lead to fiscal collapse.

The government is estimated to spend P848.39 billion annually for the next 20 years to finance the current pension system, he said.

He added that the accumulating pension liabilities would likely increase public debt by as much as 25 percent by 2030.

"We can no longer afford to keep this around," he said.

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According to Teodoro, the proposed pension reforms will cover new entry-level officers and enlisted personnel.

He believes this will not discourage new recruits as "the AFP is a value-proposition in itself; it has very competitive pay skills."

"You will have some contribution, the contribution will be even smaller perhaps than one in the private sector and your starting salary will be bigger anyway," he added.

The DND and economic managers agreed that the "AFP retirement system shall be separate from the rest," Teodoro said.

"There are lines of convergence but it is a distinct discipline and organization from the rest of the law enforcement agencies," he said.

Teodoro said President Ferdinand Marcos Jr. might include a general outline of the proposed military pension system in his second State of the Nation Address on Monday, July 24.

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