MANILA - The House of Representatives has started plenary deliberations on the proposed reform of the military and uniformed personnel pension system.

Lawmakers took turns delivering their sponsorship speeches on House Bill 8969 which is meant to make the pension and benefits of the MUP more sustainable.

As explained in the fact sheet prepared by the Ad Hoc Committee on the MUP Pension System, the bill withholds the mandatory contribution of active MUP from the monthly compensation.

This means that for the first to third year, the MUP's have a mandatory contribution equivalent to 5 percent of their monthly compensation which will be witheld. The National Government will match that with a 16 percent contribution.

For the fourth to sixth year, the MUP share will grow to 7 percent but the national government share goes down to 14 percent. From the seventh year onwards, the MUP share rises to 9 percent while the government's share settles at 12 percent.

New entrants however pay a mandatory contribution of 9 percent of monthly compensation, to be matched by the national government with 12 percent.

Likewise, the bill sets the mandatory retirement age to 57 years old and provides for the automatic indexation of pension and survivorship benefits for MUP and qualified survivors to adjustments in the salary of the MUP's in the active service holding the same rank.

The indexation however is subject to 50 percent indexation of benefits to the increase in the base pay of active MUP; fixed 3 percent annual increase in the base pay of active MUP for 10 years and authorization to lower the adjustment in the benefits under unmanageable public sector deficit.

Retirement benefits of those with 20 years in the service covers the Base Pay plus longevity pay of the grade next higher than the permanent grade last held multiplied by 2.5 percent and multiplied by 20 years of service.

For those between 20 years to less than 36 years, the same formula will be followed except that it will be multiplied by the years of service.

Those with over 36 years will see the same formula instead multiplied by 36 years of service. For separation or those less than 20 years, the formula will cover the base pay plus the longevity pay of the permanent grade last held multiplied by the years of active service.

It retains the granting of promotion to one rank higher upon retirement. It also creates 2 separate trust funds--the Armed Forces of the Philippines Trust Fun and the Uniformed Personnel Services Trust Fund.

It also allows additional sources of funding such as the proceeds from the lease, joint development, auction of development rights or disposition of government properties identified for the purpose and invest income from the trust fund.

It earmarks proceeds from the disposition of assets one MUP service to its personnel.

"In his second State of the Nation Address, President Marcos asked 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.” MUP Committee chair Rep. Joey Salceda said in his sponsorship speech.

"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 percent," Salceda explained.

"Indexation became more unsustainable in 2018, when then President Duterte approved the increase in base salaries of active personnel which doubled both MUP salaries and retirees’ pension. " Salceda added.

"However, the impact of the automatic salary indexation was minimized for the 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. Consequently, the estimates of actuarial reserve deficiency for the MUP pension should also decline from the original P9.6 trillion," Salceda said.

One of the panel's vice chairs, House Committee on National Defense chair Rep. Raul Tupas, assured MUP's that the bill does not leave their sacrifices unrecognized.

"We are proud of your accomplishments and in passing this House Bill, we trust that your sacrifices will not be left unrecognized long after you leave service." Tupas said.

Another Vice Chair, House Committee on Public Order and Safety Chair Dan Fernandez explained that the bill seeks a viable funding source for MUP pension, which he said "stands at 158.4B for the FY 2023 and is estimated to increase to 257B for FY 2024."

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