State-run Government Service Insurance System (GSIS) expressed willingness to manage the military and uniformed personnel (MUP) pension fund once it is enacted into law.
Jose Arnulfo “Wick” Veloso, GSIS president and general manager, said pension fund is open to cooperate with the national government in instituting reforms in the MUP pension scheme.
But Veloso noted that the MUP pension fund, if transferred to GSIS, cannot commingle with the coffers of existing members and pensioners.
He added that they would also need fresh capital from the national government to manage the MUP pension.
“We’re willing to be the fund managers. This is what we do, this is our job, so we will try to expand for those who will need our expertise,” Veloso told reporters in an interview.
Reforms in the MUP pension scheme is one of the proposals that the Duterte administration wanted the Marcos administration to seriously consider.
According to the Department of Finance (DOF), the the government is spending around P114 billion per year to fund the MUP pension, a hefty and unsustainable amount for the state with a ballooning debt load.
During term of former President Duterte, his economic managers pushed in Congress for a MUP reform measure.
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 a GSIS 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, the national government will be required to allocate around P850 billion to MUP pensions annually for the next 20 years.
The GSIS study also observed 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.