The Department of Finance (DOF) believes that the Department of National Defense (DND) chief may not have received sufficient briefing on the proposed military and uniformed personnel (MUP) pension reform.

Finance Secretary Benjamin E. Diokno said that Defense Secretary Gilbert C. Teodoro, who took office on June 5, joined the DND after the DOF had already conducted 30 intensive consultative meetings with the MUP.

During the Chat with SBED briefing last Friday, Aug. 18, Diokno was asked about his response to Teodoro's "concerns" regarding the MUP pension bill.

“The consultations were already finished when Gibo arrived,” Diokno told reporters, referring to the DND chief.

DOF officials have been meeting with the MUP since May to finalize the proposed pension reform before presenting it to Congress.

The House of Representatives ad hoc committee approved last week a substitute bill that mandates the MUPs to contribute to their pension funds.

However, Teodoro expressed opposition to the proposed mandatory contributions, especially for those with over 20 years of service.

Diokno, however, said that it is now in the hands of the legislature to act on the matter.

“We have to respect the legislative process. That’s one view  [Teodoro’s], I’m sure there will be other feelings,” the DOF chief said. “In legislation, we don’t get 100 percent of what you want.”

Last June 19, the DOF, along with the Bureau of the Treasury and Government Service Insurance System, paid a courtesy visit to Teodoro to discuss the MUP pension reform.

Following the meeting, the DOF quoted Teodoro in a statement, saying “MUPs’ contributions to the fund as an engine for national growth, provided that the fund is prudently managed.”

Meanwhile, Finance Undersecretary Maria Luwalhati C. Dorotan-Tiuseco cautioned that excluding active MUPs from the proposed pension reforms would result in the system taking 60 years to achieve financial self-sustainability.

To address this concern, Dorotan-Tiuseco emphasized that the pension reforms should encompass both new entrants and active personnel.

By including active personnel, she stated that the pension system could become self-supporting within 20 years, eliminating the need for additional government funding.

“We want to emphasize that our goal is to create a sustainable pension system. Currently, it is non-contributory and heavily relies on the availability of funds. Without a dedicated funding source, it is entirely dependent on the government's available funds,” Dorotan-Tiuseco said.

According to the DOF, the arrearages for MUP pensions amounted to P3.7 billion in 2021, P32.6 billion in 2022, and P5.2 billion in the current year. These figures are projected to hit to P4.8 billion by 2024.

“It is not only about addressing the tight fiscal space and budget deficit; we also aim to ensure a future where we have a sustainable source of pension,” the undersecretary added.

Meanwhile, Finance Undersecretary Maria Cielo D. Magno said the reformed MUP pension system would require an increase in government budgetary provisions during the initial years.

Magno explained that this is because the government would need to allocate extra funds for existing pensions and the government's share in the monthly contributions of the members.

The DOF estimated that an extra amount of P40 billion would be required to cover the government's share in addition to the regular budget allocation for pensions.

Diokno, however, said that although the reformed pension scheme may impose an initial financial burden, it is crucial for the long-term benefits of the government and MUP.

“Whatever burden we may have initially, our fiscal space will eventually expand, allowing us to allocate funds for other purposes like education. That's the long-term advantage,” Diokno said.

Source: Manila Bulletin (