The Philippines will face a potential “fiscal collapse” if the current pension expenditures for military and uniformed personnel (MUP) remain the same, according to Department of Finance (DOF) Secretary Benjamin Diokno. This, as accumulating debt and funds are diverted away from desperately needed social services.
Responsible for this problem is the unsustainable pension system for retired military and police. Currently, retired MUP can enjoy an average monthly pension of around P40,000 a month without having contributed a single peso during their years of service. As an effect, taxpayers bear the burden of funding MUP’s pension.
Worse are its generous provisions where MUP who rendered service for at least 20 years can opt for optional retirement and be granted automatic indexation, where their pension will be equivalent to the salary of a rank higher than their last held position. Under this system, a 40-year-old colonel who has served for two decades can already retire and enjoy a pension of a brigadier general for the rest of their life.
This is in stark contrast to the pension systems of civilian government and private employees who, to receive benefits, must retire at the age of 60 and must have contributed a portion of their salary. The amount they receive also pales in comparison to a retired MUP who receives nine times more money than the average Social Security System pensioner and three times more than the average Government Service Insurance System pensioner.
Presently, MUP pensions already outspend the operating expenses of the military by a quarter at P164 billion. To resolve this, Marcos Jr. prioritized a reform that removes automatic indexation, sets the minimum pensionable age at 57, and adds mandatory contributions from personnel. The proposed adjustment could curb forecasts of pension expenditures reaching P1.5 trillion by 2040 and avoid a 25 percent increase in public debt by 2030, according to the DOF.
With such a generous and unsustainable system, a reform is justified to alleviate constraints in the budget and correct a myopic policy designed to curry political favor, said Rogelio Panao, an associate professor at the UP Diliman Department of Political Science. But expectedly, there has been opposition to the reform.
Sen. Ronald dela Rosa, a former police chief, proposed the government to require the United States to pay for establishing bases in the country to fund the MUP pension system instead of reforming it. But this would not make the scheme sustainable as the finances would still come from annual appropriations and remain dependent on taxpayer funding. “’Pag sinabing sustainability, di lang usapin ng source kundi ang management ng pondo,” Panao said.
Meanwhile, around 70 to 80 percent of enlisted MUP are expected to retire early to avoid being affected by drastic reforms, argued Carlito Galvez Jr., former officer-in-charge of the Department of National Defense. Changes in the pension system would cause demoralization among their ranks, which he cited as a concern for the security sector.
However, these claims only seem to be a strategy that inflates the consequences of reform, when, in reality, keeping the MUP pension system will be more detrimental to the national budget as more claimants enter to burden taxpayers further, said Panao. The narrative of demoralization unjustly frames the military as victims and fails to include the overwhelming benefits they have unfairly received in return for the reactive service they have provided. During the Duterte administration, the salaries of MUP were doubled while they carried out the infamous drug war that left 6,229 people dead and countless more red-tagged.
The continuous political patronage of the government toward the military to appease them has culminated in the current lopsided MUP pension system.
The budgetary priority of allocating expenses to fund undeserving MUP is misplaced, and should instead be reformed to fund education and other social services. “Sa Constitution, saan dapat pinakamalaki mong ine-expect ang expenditure? Education di ba? Eh halos magmakaawa pa ang mga guro para mabigyan ng benepisyo tuwing eleksyon,” Panao said.
While the MUP pension system devours more and more of the annual budget, underfunding for quality education remains unaddressed. The Alliance of Concerned Teachers has continuously demanded the fulfillment of the administration’s promises for salary increases and benefits under the Magna Carta for Public School Teachers. Classroom shortages have also hounded the country with the education department’s funding allowing construction of only 6,000 classrooms out of the needed 91,000 for the last school year.
Apart from educational needs, malnutrition has severely affected the youth causing 21.6 percent of toddlers to be stunted. Also critically underfunded is the public health in the Philippines as the country had to borrow P10 billion from the World Bank to address undernourishment through reduction programs. As such, health worker organizations pushed to increase their budget by P603.7 billion to improve health care in the nation.
Freeing up the budget entails removing unnecessary expenses. If the MUP truly embody their duty of serving the people, then they should allow a reformation of a pension scheme that undeservingly diverts billions of pesos away from educators, students, and other vulnerable sectors in the country. ●
