Finance Secretary Benjamin Diokno is reviving his proposal to reform the pension system for army and uniformed personnel (MUP) beneath the Marcos administration as he warned that failure to handle the ballooning price of pensions for retirees may result in a “fiscal collapse.”
At a Palace briefing on Tuesday, Diokno mentioned he mentioned with President Ferdinand Marcos Jr. the pension reform for retired MUPs, which he described because the “elephant in the room” that “nobody would like to touch it and they simply ignore it.“
Diokno outlined four recommendations to reform the MUP pension system, which he said were “okay” with the President.
“Yeah, he is part of the decision-making, yeah. Okay sa kaniya iyon (It’s okay with him,” he mentioned.
During his stint as Budget secretary beneath the Duterte administration, Diokno pushed for the reform of the pension system for MUPs significantly mandating uniformed personnel to contribute to their pension fund.
The plan, nevertheless, didn’t materialize beneath the earlier administration.
In reviving his pension reform plan, the Finance chief famous that the present system for MUPs is totally funded by the nationwide authorities.
“In other words, it’s appropriated annually in the budget but there’s no contribution from the retirees, okay,” Diokno mentioned.
“That’s a unique kind of pension system. Right now, I think it’s in the neighborhood of around P120 to P130 billion in the 2023 budget,” he added.
The Marcos administration’s chief financial supervisor additionally identified the “automatic indexation” system of the MUP pension fund.
Under the automated indexation system, the quantity of a retiree’s pension is robotically adjusted to match the prevailing wage of incumbent personnel of comparable rank.
“The MUP pension is automatically indexed to the salary of the personnel of the same rank. In other words if you are a retiree [and] if you are a general getting X amount of money, if the salary of the incumbent is doubled, you get your pension doubled also, okay,” the Finance chief mentioned.
Diokno additionally mentioned that when MUPs retire, “they granted one rank higher.”
“Pension can be received after 20 years of service with no minimum pensionable age. So some of them get recruited at the age of 20 so they can already retire at the age 40, okay. And you know how long their lives are, right? Military people, they live longer than us, okay, some at the age of 90, okay. So, they retire at 40 to get their pension up to age 90. Isn’t that ridiculous?” he mentioned.
“So we want to reform them… There will come a time when the current budget will only be about a third, one-third, or one-fourth of the money that we’re paying for the pensioners. So we have to really address that issue. It’s not sustainable. I said, if this goes on, there will be a fiscal collapse,” he added.
The Cabinet official additionally in contrast the pension of personal sector and civilian authorities staff towards MUPs’ pension.
“The average monthly pension – this is monthly – of military personnel is P40,000 pesos, compared that to what of SSS (Social Security System) retiree gets – it’s P4,528; and what a GSIS (Government Service Insurance System) personnel get – P13,600,” he mentioned.
Recommendations
Under the primary advice, the Finance chief mentioned that the reform ought to apply to all lively personnel and new entrance.
“So once the new system is adopted, all those who are in active service and the new recruits will have to pay their way; no longer free, okay,” Diokno mentioned.
The Finance chief additionally mentioned that the automated indexation of pension to the wage of lively personnel of single ranks ought to be eliminated.
“And third, the military/uniformed personnel will receive their pension starting at 56 years old, or now it’s now adjusted to 57 years old,” Diokno mentioned.
“And number four, mandatory contributions will be required for active personnel and new entrance similar to the GSIS pensioners,” he added.
Under the earlier administration, the federal government deliberate to create a brand new department of the GSIS to deal with the pension fund for MUPs.
The GSIS estimated earlier that it wants round P7 trillion for the takeover.—LDF, GMA Integrated News
Source: www.gmanetwork.com
