House MUP super panel okays Military Pension substitute bill

The House Super Ad hoc Committee on the Military and Uniformed Personnel (MUP) Pension System approved on Thursday the unified substitute bill based on the various bills filed designed to overhaul the MUP pension system to make it more fiscally sustainable and responsive to various concerns of the uniformed services members.

Chaired by Albay 2nd district Rep. Joey Sarte Salceda, the MUP super body involves the entire membership of five major House committees — Ways and Means which Salceda himself chairs, Government Enterprises, Appropriations, Defense and Public Order.

The MUP super panel was constituted in response to Salceda’s ‘Saving the MUP Pension’ bill filed only last month which sounded the alarm on the possible “total fiscal collapse” of the pension system for the uniformed services if no reforms are immediately enacted to save it. The MUP pension now has a P9.6 trillion unfunded deficit, equivalent to 53.4% of 2020 nominal gross domestic product (GDP), which by “2035 would already account for 66% of the country’s target deficit,”

The P9.6 trillion unfunded deficit dwarfs the P413.45 billion debts assumed by the Central Bank from the Marcos dictatorship, equivalent to 25.3% of the 1993 nominal GDP, and the P1.24 trillion debts of the power sector in 2001 which was 31.8% of the nominal GDP of the same year.

Salceda said the substitute MUP Pension bill was approved after significant issues were resolved among the committee members and with the military and uniformed services branches. It includes key revisions from the previous committee hearings and includes the addition of disability benefits in the pensioners’ authorized insurance system on top of already legislated benefits, and the creation of a provident fund to be infused with voluntary contributions from MUPs.

Salceda pushed for added disability benefits under the risk insurance system to be created, in response to the suggestion of Rep. Raul Tupas to enhance the benefits package for MUPs who incur disabilities in the line of duty.

“The benefits that MUPs will receive from the insurance system we will create under the Trust Fund Committee will be on top of whatever benefits they are already entitled to. So, this is a way to balance our fiscal reform of the system with the unique risks the MUPs take,” he said.

Salceda also acceded to the proposal of Rep. Rufino Biazon that there be a harmonized definition for what constitutes an MUP member, which should related uniformed services like the Philippine Drug Enforcement Agency (PDEA).

The lawmaker noted that the MUP pension system has been the country’s longest-standing fiscal issue, “This started in 1978. President GMA had a study on the matter commissioned in 2004, when the problem became apparent. The first bill on it was filed in 2006. It has been 17 years since that study in 2004. In comparison, the CB debts were corralled in the CB Board of Liquidators within 7 years from the Cory administration’s beginning. It took 4 years to create the PSALM for power sector debts,” Salceda explained.

“So it’s only right that we deal with this matter now while there is still a chance to do so, before this becomes an inevitable pain. With significant agreement among the members, we can move to approve this measure,” he added.

The key features of the approved committee report include the removal of automatic indexation but retention of the no-contribution scheme, pension increases based on cost-of-living adjustment, rationalizing pensionable age at 56 years old, allowing optional retirement after 20 years of notable service, higher risk insurance coverage for those wounded or killed in action, and the creation of a Military and Uniformed Services Trust Fund, with leeway to initiate a credible defense posture.