EDITORIAL — Fiscally irresponsible

In March 2023, then finance secretary Benjamin Diokno had warned of “fiscal collapse” unless reforms were introduced in the “unsustainable” pension system for military and uniformed personnel.

MUP are retirees not only from the military and police, but also the Bureau of Jail Management and Penology, the Bureau of Corrections, Philippine Coast Guard and the Philippine Public Safety College.

Unlike other workers in government and the private sector, MUP do not contribute to their pension while in the active service. The pension is automatically pegged to current MUP salary rates, which means when the pay was doubled by Rodrigo Duterte in 2018 for brownie points, so did the pension rates.

The pensions are also based on the next higher rank upon retirement.

Taxpayers are therefore fully footing the monthly pension of over P200,000 of former national police chiefs Ronald dela Rosa, who has been absent with full pay from the Senate for nine months now, and Oscar Albayalde, an accused “co-perpetrator” in the crimes against humanity case related to the drug war.

Diokno had pointed out that the maintenance and operating expenditures of the Armed Forces of the Philippines at the time was smaller than the budget for the MUP pension. The amounts, Diokno added, were also nearly nine times higher than the pensions in the Social Security System and three times higher than those in the Government Service Insurance System. 

He proposed several reforms to prevent fiscal collapse: mandatory contributions for the pension, to start only with active MUP and new entrants; the removal of the automatic pension indexation to the salaries of active personnel, and the start of pension payments only at 57 years old instead of from retirement after just 20 years in the service.

Months after calling attention to the problem, Diokno was shunted off by President Marcos to the Monetary Board. Diokno’s replacement as finance chief, Ralph Recto, when asked about the issue, effectively said any changes would be up to the next administration.

The Marcos administration may have to review its position as watchers of the national budget have renewed their warning about the MUP pensions.

For 2027, the pensions including for war veterans will cost a whopping P154.21 billion – 6.2 percent higher than the P145.17 billion this year, and nearly three times higher than the P50 billion for the AFP modernization program.

Former finance undersecretary Cielo Magno warns that deferring the reforms is “fiscally irresponsible.”

Diokno had warned that without reforms, the costs could push up public debt by 25 percent by 2030 and pass P1 trillion by 2035.

The majority of the people will suffer the consequences of fiscal collapse.