Government ought to establish a better annuity plan for military and uniformed personnel (MUP) to replace the current one, which may not be sustainable.

Camarines Sur congressmen Migz Villafuerte (5th district) and Luigi Villafuerte (2nd district) cited this apparent concern from the country's economic managers to justify their pitch for a new annuity plan, as they laid out in House Bill (HB) No.1550.

Rep. Migz, who chairs the House committee on information and communications technology (ICT), and Rep. Luigi, a deputy majority leader, said the ongoing Palace review of the non-contributory pension system for MUP should set the stage for an overhaul of the current one that would decisively address concerns over its long-term sustainability in the face of the government’s fiscal constraints. 

Their measure is dubbed the "Military and Uniformed Personnel Pension System Act".

“There is an urgency for the current Congress to write new legislation on a sustainable, equitable and financially sound  annuity system for our MUP pensioners in recognition of their invaluable contribution as our frontliners in national defense, peace and order, public safety and disaster response,” Rep. Migz said.

Meanwhile, Rep. Luigi said: “The congressional approval of such a pension bill would be a most fitting contribution of the 20th Congress to the Marcos administration’s fresh effort to bump up the living standards of our MUP, given the President’s issuance last year of Executive Order (EO) No. 107 that upgraded the base pay schedule and subsistence allowance of our military and uniformed personnel.”

In EO No.107 that was signed by President Marcos last December,  the updated MUP base pay schedule will be carried out in three tranches—with the first one  started last Jan. 1; the second on Jan. 1, 2027; and the third and last one on Jan.1 2028.

EO 107 also raised the subsistence allowance of MUPs to P350, from P150.

Acting Secretary Rolando Toledo of the Department of Budget and Management (DBM) said recently that the President’s economic team was studying MUP pension reforms in compliance with EO No.107, which provided for a 15 percent-hike base pay of MUP, for implementation in three tranches in 2026, 2027, and 2028.

This EO No.107-ordered  increase in the base pay of MUP will consequently raise the pension received by about 200,000 pensioners, given that this monthly annuity is, under the law, indexed automatically to the salaries of active personnel.

The Marcos administration has allotted over P145 billion for the pension payments of MUP and veterans in the 2026 General Appropriations Act (GAA). Under the current MUP annuity system, soldiers and other uniformed personnel do not contribute to their pension plan, and their benefits are sourced from the GAA.

When Monetary Board (MB) member Benjamin Diokno was still DOF secretary, he had proposed reforms to the MUP pension system, as he believed that the current one was not fiscally tenable and could lead to a potential fiscal crisis.

As the Villafuertes supported the pay hike for MUPs, they said that the 20th Congress can enlarge the current efforts to bump up the living standards of frontliners in defense and public safety by way of new legislation to establish a "sustainable, equitable, and financially sound” annuity plan.

The House of Representatives had previously passed an MUP pension bill in the 19th Congress, but stalled following the Senate’s failure to pass a counterpart measure. 

MUPs refer to the members of the Armed Forces of the Philippines (AFP); Philippine National Police (PNP); Philippine Coast Guard (PCG); Bureaus of Fire Protection (BFP), of Jail Management and Penology (BJMP), and of Corrections (BuCor); as well as the commissioned officers of the Hydrography Branch of the National Mapping and Resource Information Authority (NAMRIA).

For those who entered the active service prior to the effectivity of HB No.1550, the bill provides that the monthly retirement pay shall be 50 percent of the base pay and longevity pay of the grade next higher than the permanent grade last held by the personnel in case of 20 years in active service, increasing by 2.5 percent for every year of active service rendered beyond 20 years to a maximum of 90 percent for 36 years of active service and over.

For new entrants to the MUP service, the monthly retirement pay shall be 50 percent of the base pay and longevity pay of the permanent grade last held by the personnel in case of 20 years in active service, increasing by 2.5 percent for every year of active service rendered beyond 20 years to a maximum of 90 percent for 36 years of active service and over.  

Upon retirement, an MUP shall choose between the following modes of payment of retirement benefits:  1.) Lump Sum – Received in advance and in one lump sum, retirement benefits equivalent to 36 months; and 3 years thereafter, received monthly retirement benefits as they accrue; or 2.) Direct Pension – Received monthly retirement benefits as they accrue.  

The retirement pay of an MUP who is killed-in-action or wounded-in-action resulting in total permanent disability, as duly certified by the appropriate medical certification process of the respective services, is computed at the rate of 90 percent of the monthly base and longevity pay of the retirement grade of the personnel regardless of years in active service.

For new entrants, the monthly retirement pay shall be 50 percent of the base pay and longevity pay of the permanent grade last held by the personnel in case of 20 years in active service, increasing by 2.5 percent for every year of active service rendered beyond 20 years to a maximum of 90 percent for 36 years of active service and over.  

An MUP who separates or resigns from the service without reaching 20 years of satisfactory active service shall receive a separation pay equivalent to one month's base pay plus longevity pay of the permanent grade that the MUP holds at the time of separation for every year of active service.