MUP pension budget hiked by over a third

DOF: MUP reform bill means additional P141 billion

MANILA, Philippines — The proposed allocation for the pensions of military and uniformed personnel (MUP) has risen to P197.99 billion based on the 2026 National Expenditure Program (NEP), an increase of 36.8 percent from this year’s P144.72 billion.

Despite the government’s substantial allocation for MUPs’ pension, the Department of Finance (DOF) expressed reservations over the proposed MUP pension reform bill, warning that it could impose a heavier fiscal burden on the government.

“Every reform comes with corresponding costs. For example, implementing the MUP reform bill is expected to incur an additional cost of around P141 billion over the next three years,” Finance Secretary Ralph Recto said.

The annual fund is meant to pay MUPs’ pension and retirement gratuity and terminal leave benefits, including separation benefits and incentives. The MUPs do not contribute to the fund.

Recto said the DOF’s preferred version of the MUP bill largely reflects the submitted proposals, but he stressed that incorporating government assets into the legislation would help offset costs.

The land of the Bureau of Corrections (BuCor), for instance, can yield P1.5 trillion, with approximately P500,000 per hectare. This would be enough to eliminate the government’s deficit, he said.

“In short, the additional cost is about P45 billion per year, so it will take time, up to 40 years, before the benefits of the reform are fully realized,” Recto added.

A version of the proposed MUP pension reform bill includes a guaranteed annual salary increase for MUP and an adjustment of mandatory retirement age upon accumulation of 30 years of service.

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

“Without implementing the reform, pension expenses for 2026 will amount to P133.9 billion. What about the rate of increase?” Recto said. “If we implement the MUP reform, expenses would rise by P45 billion. In a sense, we could save P45 billion.”

The MUP refers to the military personnel of the Armed Forces of the Philippines and the uniformed personnel of the Philippine National Police (PNP), Bureau of Fire Protection, Bureau of Jail Management and Penology, BuCor, Philippine Coast Guard and National Mapping and Resource Information Authority (NAMRIA). The separate and slightly different MUP retirement schemes for each agency are collectively referred to as the MUP pension system. It is a defined-benefit scheme with a lump-sum payment upon retirement and monthly pensions indexed on the current wages of active MUP, according to an October 2024 report by the Senate Economic Planning Office.

In 2022, according to the Senate think-tank, there were 470,073 active MUP, composed mostly of police officers under the PNP (47.49 percent) and military personnel under the AFP (34.45 percent). BuCor and NAMRIA have the smallest shares of MUP at 1.49 percent and 0.06 percent, respectively.

Furthermore, it said that during the same year, there were 174,500 regular MUP pensioners, indicating that for every 100 active MUP, there were 37 regular pensioners.

The average age of MUP in 2019 was 35, with an average length of service of 10 years. Monthly compensation averaged P39,687 while pensioners received an average monthly pension of P43,475 during the said period.