The Development Budget Coordination Committee (DBCC) has expressed its full support for efforts of Congress to discuss and enhance the proposed reform of the military and uniformed personnel (MUP) pension system.
In a joint statement released yesterday, Budget Secretary Wendel Avisado, Finance Secretary Carlos Dominguez, Socioeconomic Planning Secretary Karl Kendrick Chua and Central Bank Governor Benjamin Diokno said a strong fiscal framework for the MUP pension system will help free up space for the country’s coronavirus disease 2019 (COVID-19) recovery.
“We thank congress for passing game-changing fiscal and economic reforms that have helped the country weather the worst impact of the COVID-19 pandemic,” the statement said.
“To protect the gains made with these reforms and to avoid the potentially dire fiscal fallout from maintaining the status quo, we urge congress to pass a fiscally sustainable version of the MUP pension reform when session resumes,” it added.
The DBCC said keeping MUP pension liability growth at controlled levels is crucial to the country’s fiscal stability.
The government officials said actual MUP pension spending has grown at an average rate of 12.3 percent from 2010 to 2019, and has now exceeded spending for the capital outlays and maintenance and other operating expenses of the military and uniformed services.
“Reforming the MUP pension system is long overdue, and has acquired greater urgency in view of the growing fiscal burden and sustainability risks it poses. If we are to modernize our uniformed services into a credible and advanced defense force, we must have the fiscal space to hire personnel, purchase state-of-the-art military equipment, and invest in their training and protection,” the members of the DBCC said.
“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,” they added.
According to an actuarial study conducted by the Government Service Insurance System in 2020, the current system entails a total funding requirement estimated at P9.6 trillion to cover the future obligations pertaining to existing active members and pensioners of MUP.
