Department of National Defense (DND) Secretary Gilberto C. Teodoro Jr. clarified Monday, Aug. 24, that less than half of the proposed P142.95 billion Military and Uniformed Personnel (MUP) pension fund for next year is allocated for Armed Forces of the Philippines (AFP) retirees, saying comparisons with the AFP modernization program are misleading.

The clarification came after a report highlighted that the Marcos administration has proposed P142.95 billion for MUP pensions in 2027, up 6.8 percent from P133.91 billion this year and nearly triple the proposed P50-billion AFP modernization budget.

“Only 49.6 percent of the total MUP pension budget is earmarked for AFP retirees. The rest go to other security services. Therefore, to equate the total MUP pension to the AFP modernization is not accurate as a comparison indicator,” Teodoro said in a statement.

Based on the P142.95-billion allocation, the proposed amount allocated to military pensioners reaches about P70.88 billion while the remaining funds are for pensioners from other uniformed services.

However, Teodoro noted that the comparison should take into account problems surrounding the AFP modernization system itself.

“The MUP debate, when framing the debate with respect to modernization, evades the key question of total resources devoted to the AFP and to the defense space. As of this time, with worldwide vulnerabilities, almost all countries have made the conscious decision to increase defense spending in large adjustments - we cannot be immune to this,” he said.

He also called for a review of the AFP modernization budget and the repeal of the AFP Modernization Act, a 15-year modernization program for the AFP, saying the program's original funding mechanism had relied on remittances from the Bases Conversion and Development Authority (BCDA).

“The AFP modernization budget was supposed to be sourced from BCDA remittances, which as we all know, have been marginal and need to be subsidized by the National Government. Worse, defense-optimized national real estate assets were lost. This must be halted and the corporate structure of BCDA be abolished,” Teodoro said.

The defense chief added that the modernization law itself is outdated as he underscored the continuous missions of soldiers across the archipelago.

“Which entity works on 15-year horizons this day and age?” he asked.

“Our force structure is extremely lean and, given the fact that they must keep watch over 7,600 plus islands and 2.4 million square kilometers of maritime area, their pensions should be National Government derived,” he added.

Further, the defense chief noted that other agencies should share in pension burdens since they secure more identifiable sectors.

“I am not opposing reforming pension systems, but it must be done under the spirit laid down by this clarification,” he said.

The MUP pension system has been under government review as lawmakers continue to consider proposals to overhaul it. Under the current system, military and uniformed personnel are not required to make mandatory pension contributions unlike civilian workers covered by the Social Security System (SSS) or Government Service Insurance System (GSIS).

The Department of Budget and Management (DBM) earlier said the reform remains under a “comprehensive government review.” Executive Order 107 also created an inter-agency technical working group composed of representatives from the DBM, DOF, Bureau of the Treasury, and GSIS to study possible changes.

The DBM said any recommendation must balance the long-term sustainability and equity of the pension system with the government's commitment to protect the welfare and benefits of MUP personnel.