Department of National Defense Secretary Gilberto C. Teodoro Jr. (PNA file photo)
MANILA – Department of National Defense (DND) Secretary Gilberto C. Teodoro Jr. on Wednesday night expressed his appreciation to the House of Representatives for agreeing to adopt their proposals on the substitute bill on the Military and Uniformed Personnel (MUP) Pension Reform.
"We thank our legislators for understanding the position of the department on the issue of pension reform and on our part, we pledge to exert our utmost efforts in transferring available real estate assets into the proposed AFP (Armed Forces of the Philippines) Retirement Trust Fund," he added in a statement.
Albay 2nd District Rep. Joey Salceda, chair of the House Ad Hoc Committee on the MUP Pension System, earlier said that Teodoro's proposal regarding the indexation and transition phase would be introduced as House floor amendments to the bill as the committee already terminated its proceedings.
“As chair of the Ad Hoc Committee, I would like to assure the Secretary that his requests are acceptable. We will adopt the Teodoro proposal of indexation for all retired and retirables (individuals eligible for retirement) and a transitioned contribution scheme," he said.
In pushing for his proposals, Teodoro pointed out that the distinction between the Armed Forces of the Philippines (AFP) and the rest of the uniformed services goes beyond the differences between the nature of their duties and responsibilities.
"While these differences are significant and should be fundamental considerations for the proposed changes in their respective pension systems, from a financial perspective, I must point out that the AFP will not increase its force size in the same manner as the other services, whose numbers are tied in to the country’s growing population," he added.
"In short, AFP personnel will not increase its personnel over time, unlike other services, which must increase theirs by necessity in order to maintain an ideal service ratio in proportion to the number of our citizens and communities."
Teodoro also said the AFP's size is based on its mission of upholding the country's sovereignty, supporting the Constitution and defending the territory of the nation against all enemies foreign and domestic, among others.
He added that the public must keep this important distinction in mind.
"Hence, the pension burden of the AFP retirees on government expenditures will actually reduce over time as the envisioned AFP Retirement trust fund becomes viable as a funding source given a constant force size. Also, it is proposed that the share in the BCDA (Bases Conversion and Development Authority) earnings of the AFP and other DND-related GOCCs (government-owned and -controlled corporations) be realigned to service AFP retiree pensions," he said.
Teodoro also pointed out that the DND is not ignoring pension reform but is in fact, helping craft a sustainable one, which would include the creation of the trust fund, which when valued, would not be inconsiderable.
He said they understand the efforts being made by lawmakers to ease budgetary deficits.
"However, we are informed that the financial impact of the pension burden of the AFP (stand-alone, not with the other uniformed services) retirees, current and prospective, is substantially lower than as originally stated," he noted.
Teodoro also pointed out that the DND has no intention of downplaying the significant contributions of all sectors of society in nation building and making the country resilient.
However, he said it is also undeniable that all these collective efforts would fail if the country does not have a strong, well-equipped, motivated and professional AFP.
"The department hopes that our lawmakers will take these factors into consideration and help us ensure the welfare of our soldiers and their families," he added.
Under the current pension system, the pensions and benefits of MUPs are fully funded by the national government through annual appropriations. MUPs are also automatically promoted one rank higher upon retirement.
The monthly pension is automatically indexed to the salary of those in active service.
Under the approved substitute bill, the indexation of the pension of the MUPs shall be at 50 percent.
The bill also proposes that MUPs would be required to contribute 5 percent for the first three years, 7 percent for the next three years and 9 percent thereafter for active personnel while new entrants would contribute 9 percent of their base and longevity pay for their pension.
As a counterpart, the government will chip in 16 percent for the pension of those in active service during the first three years, 14 percent during the fourth to sixth year and 12 percent for the seventh year and onwards.
The government will contribute 12 percent for new entrants. (PNA)
