DBM releases P14 B for military pensions

The Department of Budget and Management (DBM) announced on Friday, Jan. 13, that it has released P14 billion to cover the regular pension requirements of military retirees.

In a statement, Budget Secretary Amenah F. Pangandaman said the Special Allotment Release Order (SARO) for the military pension was released last Jan. 12 to the Department of National Defense – Armed Forces of the Philippines (AFP).

The SARO and its corresponding Notice of Cash Allocation (NCA) cover pension requirements from January to March 2023, Pangandaman said.

She noted that the timely release of funds for the pension requirements of military retirees is one of the government’s initiatives to recognize their critical role in the security and stability of the country, which remains a priority of the Marcos administration.

“It is our responsibility to make sure that our retirees, as well as their families, always get the benefits entitled to them. This is the least we can do to show them our sincerest gratitude and respect,” Pangandaman said.

The fund is chargeable against the Pension and Gratuity Fund (PGF) under the 2023 General Appropriations Act (GAA).

AFP payroll records as of Dec. 31, 2022 showed there were 137,649 pensioners covered by the monthly pension requirement for the first quarter of 2023.

The DBM latest fund releases come as the Department of Finance (DOF) pushes to resolve the complicated military and uniformed personnel (MUP) retirement and pension system.

Last November, Finance Secretary Benjamin E. Diokno said the MUP pension scheme remains a fiscal risk, which the national government cannot no longer afford to just ignore.

"That's the elephant in the room. I always say that. Right now, it is I think P120 billion in the current 2023 budget proposal and that would continue to balloon unless we will address that issue,” Diokno said.

Reforms in the MUP pension scheme was one of the proposals that the Duterte administration had wanted the Marcos administration to seriously consider.

According to the DOF, the the government was spending around P114 billion per year to fund the MUP pension, a hefty and unsustainable amount for the state with a ballooning debt load.

The current MUP pension system is non-contributory, hence retirement pensions and benefits are fully funded by the national government through annual appropriations.

Diokno said the Marcos administration wants the Government Service Insurance System (GSIS), a state-owned firm handling the pension of all government workers, to assume management of the MUP.

However, Diokno said the military and uniformed personnel funds should not commingle with GSIS’ existing coffers and should be contributory in nature, especially among new entrants.

“If the military pension will be covered by the GSIS... There will be civilian component and a military component,” the finance chief explained.

However, Diokno said “we have to respect what has already been committed to those who have retired. So, from now on after the military pension bill was passed, those who will enter, those who are in active service will contribute.”