MUP pushback

The reforms in the pension system of military and uniformed personnel or MUP will be passed by yearend.

This is according to Sen. Jinggoy Estrada, who chairs the Senate committee on national defense and security, which is deliberating on the reforms in the MUP pension system proposed by Marcos 2.0’s economic team led by Finance Secretary Benjamin Diokno.

Whether Diokno will get all the reforms he wants remains to be seen; it will be another test of his influence in this administration. He got a mangled version of the hastily crafted Maharlika Investment Fund, and he was (by his own admission) kept in the dark about the price caps on rice.

In the case of the MUP pension, Diokno recently lost his point person in his effort to get the affected sectors on board. Cielo Magno was supposed to meet last week with more MUP representatives to explain the need for the reforms. But Malacañang had told her to resign as finance undersecretary after she criticized the rice price caps.

Meanwhile, an influential voice has been added to the resistance to the reforms, notably the mandatory pension contributions by military personnel in the active service: Gilbert Teodoro, newly confirmed secretary of the Department of National Defense.

The DND chief has surely reviewed the points raised by MUP pensioners.

Benjamin Magalong, a retired police general who is now mayor of Baguio City, had previously cited entrenched corruption and misplaced spending priorities for the government’s fiscal woes.

Retired Navy Vice Admiral Ariston delos Reyes also lamented that one other sector is enjoying non-contributory pension but is excluded from proposed reforms: the judiciary, plus officials of the constitutional bodies.

Delos Reyes and Senator Estrada faced “The Chiefs” on Cignal TV’s One News last month.

Estrada found Delos Reyes’ arguments compelling enough to invite the admiral to the Senate hearings on the MUP pension reforms.

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Delos Reyes told us that Gloria Macapagal-Arroyo, in the final months of her presidency, approved the hefty, non-contributory pensions for judges, justices, prosecutors and officials of constitutional bodies.

While there are only about 2,000 such personnel, pensions in the judiciary are computed to include even magistrates’ pay for special functions such as membership in the electoral tribunals. The average pension in the judiciary is the equivalent of that given to a military major general, Delos Reyes told The Chiefs.

Ombudsman Samuel Martires had attributed a P15-million increase in his income, within just five months of his appointment to the post, to his retirement as an associate justice of the Supreme Court. When he finishes his seven-year term in his current post, he stands to receive another hefty retirement package. What did he do to deserve so much of people’s money?

Cielo Magno, who faced The Chiefs last week, told us that the Department of Finance is also reviewing the pensions in the judiciary for possible reforms. She said the DOF understands that military personnel provide a different level of public service that warrants certain special privileges.

Even in other countries including the United States, which deploys its soldiers to conflict zones around the world, those whose job description involves putting their lives on the line are accorded special privileges. Anyone with relatives in the US military are aware of these privileges, from free education to extensive medical coverage apart from the comfortable pension.

In the Philippines, however, the controversial pension covers other uniformed personnel. These include not only members of the Armed Forces of the Philippines but also the Philippine National Police, Bureau of Corrections, Bureau of Jail Management and Penology, Bureau of Fire Protection, Philippine Public Safety College and the Philippine Coast Guard.

They are all automatically promoted to the next higher rank upon retirement, which can be after rendering 20 years of service, and their pension is based on this higher rank. The rate is automatically indexed to the pay of active personnel. Diokno wants to scrap or modify these privileges.

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Delos Reyes and the finance officials disagree on whether AFP members previously contributed to their pension. Delos Reyes maintains that the only contributions military personnel made in the past were in the form of savings that they withdrew with interest upon retirement.

Interestingly, Delos Reyes’ background might have inspired the manner of Magno’s “termination” from her finance post over a week ago.

In March 2010, Delos Reyes had complained that he was unfairly ousted as DND undersecretary for internal affairs. He suspected that it was because of his investigation into two misconduct cases involving another DND undersecretary and an assistant secretary.

The undersecretary allegedly signed a DND order that allowed his son to be admitted to the National Defense College of the Philippines, according to the complaint for dishonesty that Delos Reyes filed. Meanwhile, the assistant secretary allegedly maintained an illegal ammunition cache.

The DND explained that Delos Reyes was “seconded” to the department following his retirement from the AFP in 2006. The maximum term for a secondment is three years. Delos Reyes’ three years lapsed in 2009 but was renewed for a year, although this was not allowed under civil service rules, the DND explained. Malacañang said then president Arroyo simply decided not to extend his secondment, so it was not a termination. Delos Reyes said he was not aware of a three-year term limit when he was appointed to the DND.

Magno, who was also seconded to the Department of Finance from the University of the Philippines School of Economics, appears to be aware of the three-year limit. But in her case, she held the DOF post for just over a year.

President Marcos, whose father was ousted in a military-backed popular revolt, is surely aware that MUP reforms have political ramifications.

He will have to address the MUP retirees’ challenge to Diokno’s most basic premise for the proposed reforms: that without the changes, the pension system is unsustainable and the government faces fiscal collapse.