Lorenzana warns of collapse of soldiers' pension system, urges lawmakers to act

Published June 21, 2021, 1:46 PM

by Martin Sadongdong

The Department of National Defense (DND) urged lawmakers on Monday, June 21, to effect necessary adjustments on the military and uniformed personnel (MUP) pension system, including the provision of a separate fund for it as it is bound to collapse in the years to come if the ballooning amount of money needed to sustain it is left unaddressed.

Defense Secretary Delfin Lorenzana (Photo courtesy of DND)

Defense Secretary Delfin Lorenzana said the current MUP pension system that is being subsidized by the government “will become unsustainable in the near future” as it will be “a huge burden to our taxpayers.”

“It is time to revisit the pension system with the objective of generating and maintaining a self-sustaining fund that would totally or partially unburden the government financially,” he said.

At present, Senate Bill No. 1419 filed by Sen. Christopher Lawrence “Bong” Go seeks to reform the MUP pension system by attaining fiscal stability and sustainability of the military and police personnel’s pension without prejudice to the current pensioners and those in the active service.

At the Lower House, Albay Rep. Joey Salceda filed HB No. 9271 to fix the pension system of the military and other uniformed personnel.

The Defense Chief said a careful study of their fiscal situation, gathering of suggestions from concerned stakeholders especially in the Armed Forces of the Philippines (AFP), and further deliberations will be undertaken and considered to fine-tune the proposed bill.

“Looking after the welfare of our soldiers is one of the key mandates of the Department of National Defense, and this includes ensuring that they receive the appropriate retirement benefits that are due them for their years of honorable and dedicated service,” he emphasized.

According to the Government Service Insurance System (GSIS), the MUP pension system currently has a P9.6 trillion unfunded reserve deficit and a total of P848.39 billion is needed annually to sustain it for the next 20 years based on the existing scheme.

Under the scheme, MUPs are not required to pay mandatory contributions for their pension unlike civilian government employees.

Civilian government employees have to contribute monthly to the GSIS, the state pension fund. The MUP pension fund is being subisidized by the government through annual appropriations in the national budget.

A total of P90.9 billion was set aside in 2018 for the pensions of MUPs and veterans; P87.6 billion in 2019; P81.2 billion in 2020 and P127 billion in 2021, according to Salceda.