Pension reform must now go forward; time to let go of 'elephant in the room'
In this week’s press briefing at Malacañang Palace, Finance Secretary Benjamin Diokno proposed a four-pronged plan on reforms in the pension program for military and uniformed personnel (MUP) of the Armed Forces of the Philippines (AFP), the Philippine National Police (PNP), the Philippine Coast Guard (PCG), the Bureau of Jail Management and Penology (BJMP), the Bureau of Fire Protection (BFP), the Philippine Public Safety College, and the Bureau of Corrections (BuCor).
The four-point plan, which according to him has been approved by President Ferdinand R. Marcos, Jr., consists of the following: first, it shall apply to all those who are currently in the active service and to all new recruits; second, the automatic indexation of pension to the salary of active personnel of similar ranks must be removed; third, MUPs shall receive their pension at 57 years old, and not automatically after 20 years of service; and fourth, mandatory contributions will be required for active personnel and new entrants similar to the Government Service Insurance System (GSIS) pensioners.
Secretary Diokno emphasized at the briefing that it is time to recognize the “elephant in the room” — the long festering problem of inadequate funding to sustain the retirement benefits of the country’s military and uniformed personnel.
Since 2003 or for two decades, payment of retirement benefits due to the MUP had been authorized through annual appropriations in the national budget that have now become unsustainable. Hence, it is imperative that all new recruits and active personnel be required to start making regular contributions to support the funding of their future retirement benefits.
Funding for such retirement benefits was previously sourced from the AFP Retirement and Separation Benefits System (AFP-RSBS). In 2003, the Feliciano Commission that was created to probe into the causes of discontent that precipitated the Oakwood mutiny declared that the AFP-RSBS was “fundamentally flawed” and unable to carry out its mandate. But despite the issuance of executive orders in 2006 and 2007 mandating its deactivation including its winding down and liquidation, these were not fully implemented until it was finally abolished in 2016.
Now the ball is in the hands of Congress. Our legislators must act with dispatch on the action plan proposed by the finance secretary. Further delays would simply aggravate this long-festering problem. The national government is already heavily burdened with the additional funding required by the Mandanas-Garcia ruling of the Supreme Court involving a greater measure of devolution of government authority to local government units (LGUs). Post-Covid pandemic economic recovery measures would also be hampered by inefficiencies in the allocation of government resources.
Evidently, the national government could no longer carry the burdens created by inequities arising from the proverbial confluence of unfortunate circumstances that, in the past, were simply swept under the rug. The military and uniformed personnel who defend the security of the state and maintain peace and order could certainly be depended upon to support the national government’s efforts to rationalize the administration of their retirement and separation benefits.