The interagency Development Budget Coordination Committee (DBCC) is urging the Congress to pass legislation to make the military and uniformed personnel (MUP) pension system financially feasible.
The DBCC expressed full support for Congress’ efforts to study and improve the administration’s proposed reform of the MUP pension system in a joint statement released on Tuesday.
DBCC members Budget Secretary Wendel Avisado, Finance Secretary Carlos Dominguez 3rd, Socioeconomic Planning Secretary Karl Kendrick Chua, and Bangko Sentral Governor Benjamin Diokno said, “we urge Congress to pass a fiscally sustainable version of the MUP pension reform when session resumes.”
They argue that MUP pension reforms are necessary to protect the gains made as a result of Congress’ game-changing fiscal and economic reforms, as well as to avoid the potentially disastrous budgetary repercussions of maintaining the current pension system.
According to the economic managers, maintaining automatic indexation of pensions to salaries of active staff is also a major threat to the pension system’s long-term stability, since MUP pay has climbed by an average of 19.63 percent from 2008 to 2019.
From 2010 to 2019, actual MUP pension spending increased by 12.3 percent on average. MUP pension costs have now overtaken those of the military and uniformed services in terms of capital outlays, maintenance, and other operating expenses as a result of this enormous expansion.
“Without funding sources to support this growing expenditure, the MUP pension system, as well as the fiscal stability of the national government, is at serious risk. The ability of the government to compensate active personnel and invest resources to keep MUP in fighting shape is also in jeopardy,” the DBCC members warned.
They said that the current administration has taken significant effort to address the issue. As part of Joint Resolution 1 (2018), which increased compensation for active MUP, the administration insisted on deferring indexation of MUP pensions to base pay until a review of the current pension system by the Executive and Legislative.
BY MEYNARD DELA CERNA