The Department of Budget and Management (DBM) said it was able to release only the one-month equivalent of the 2018 pension differential of retired military and uniformed personnel (MUP) despite numerous inquiries from retirees.
In a statement, the budget department said it disbursed only P2.85 billion, equivalent to 8.3 percent, of the required P34.2 billion allocation for the 2018 pension differentials for retired MUP.
The DBM noted that the meager fund release was due to “significantly reduced” pension and gratuity fund (PGF) under this year’s national budget, or General Appropriations Act. Lawmakers allocated only P152.9 billion for PGF, 11.5 percent lower against the required P172.9 billion budget.
The initial release will benefit retired military personnel of the Armed Forces of the Philippines, DBM said.
The department added that it will also benefit retired uniformed personnel of the Philippine National Police, Bureau of Fire Protection, Bureau of Jail Management and Penology, Philippine Coast Guard and National Mapping and Resource Information Authority.
"The total requirement to cover the 2018 pension differential of retired MUPs amounts to P34.20 billion. This leaves a balance of P31.35 billion which is yet to be released subject to the availability of funds and in compliance with applicable rules and regulations,” DBM said.
“Rest assured that the Department will immediately evaluate and process all special budget requests after satisfying the requirements for the current regular pension and pension arrears as validated by the Commission on Audit,” it added.
Amid budgetary constraints hounding the military pension system, National Treasurer Rosalia de Leon has urged anew the lawmakers to immediately reform the present pension system for MUP due to its growing fiscal burden and sustainability risks.
The current MUP pension system is non-contributory, hence retirement pensions and benefits are fully funded by the national government through annual appropriations.
According to an actuarial study, the current system entails a total funding requirement estimated at P9.6 trillion. This amount covers the future obligations pertaining to active members and current pensioners of the MUP.
If the current system prevails, de Leon said the national government will be required to allocate around P850 billion to MUP pensions annually for the next 20 years.
A Government Service Insurance System (GSIS) study also showed that the growth rates of MUP pension expenditures have been steadily dwarfing the Maintenance and Other Operating Expenses (MOOE) of MUP agencies over the years.
The present scheme also features the option to avail of early retirement after at least 20 years of service, even ahead of the mandatory retirement age of 56.
In addition, the monthly pension of MUP retirees is automatically indexed to the salary of the next in rank in the active service, said the GSIS study.
Hence, salary adjustments for active personnel directly affect and significantly jack up the funding requirement for retirees.