MUP pension budget rising 50% to P217 billion

As reform put on hold

MANILA, Philippines — As reform in the pension system of the military and other uniformed personnel (MUP) has been put in the back burner, the government will have to increase the sector’s budget by 50 percent to P217 billion next year.

Based on the emerging 2026 National Expenditure Program (NEP) obtained by The STAR, the proposed allocation for the Pension and Gratuity Fund (PGF) is at P216.54 billion, up by 50 percent from this year’s P144.72 billion.

The annual fund is meant to pay MUPs’ pension and retirement gratuity and terminal leave benefits, including separation benefits and incentives.

Given that the MUP pension system reform has yet to become a law, it remains included in the record P6.793 trillion budget for 2026.

The Department of Finance has yet to respond to questions on whether it will pursue the MUP pension reform.

In 2023, then finance secretary Benjamin Diokno first floated the idea of overhauling the system to avert fiscal collapse. He was later replaced as finance chief and moved to the Monetary Board.

Since then, the economic team has conducted consultations with the sector. Toward end-2023, the House of Representatives approved on second reading the MUP bill, but removed a key provision that would require active members to contribute.

In the Senate, a counterpart measure is still awaiting second reading.

But last year, the MUP bill failed to make significant strides in the legislative branch. The DOF has not provided updates on its proposal.

Earlier versions propose a guaranteed annual salary increase of three percent for MUP for 10 years and an adjustment of the mandatory retirement age from 56 to 57 years old upon accumulation of 30 years of service, whichever comes later.

It also covers the establishment of two separate trust funds: the Armed Forces of the Philippines Trust Fund and the Uniformed Personnel Services Trust Fund.

As of now, the MUP continues to enjoy the benefits of a pension system even without any contribution into the fund. As such, the government appropriates a budget annually to fund this.