Mandatory contributions, salary hikes among MUP pension reforms —Salceda

Mandatory contributions and annual salary increases for ten years are among the Marcos administration's military and uniformed personnel pension reforms, Albay Rep. Joey Salceda said on Thursday.

Salceda, the chairman of the House Committee on Ways and Means, said that other salient points of the MUP pension reform include:

• retaining indexation of pension but limiting pension increases to 50% of the salary increase for active personnel; and
• the creation of an MUP Trust Fund and a governance committee with the economic managers and the MUP services being represented; and retention of almost all other features of the MUP pension system.

“Active MUP will contribute a portion of base pay, but where the government will pay a larger counterpart. We are looking at patterning it after the deductions to civil servant salaries, at 9% for the employee, and 12% government share,” Salceda said.

He said the rates are still subject to deliberation.

“We could ease the deductions through a transition period,” said Salceda, the chairman of the ad hoc committee on pension reform.

Under the present system, MUPs do not contribute to their pension, which is fully funded by the government under the national budget.

The proposed P5.768 trillion national budget for 2024 has earmarked P253 billion for the pension and gratuity fund.

“The biggest problem with the MUP pension system is that each time salaries grow, pension liabilities also grow. Indexation of pensions to active personnel salaries is the key feature of the pension system. So, any reform must focus on that – either to control salary growth or to control its effects on the pension,” Salceda said.

“We will listen to all stakeholders to refine the version, but we have received very positive feedback about the version we have at hand,” he added.

Salceda expressed confidence that the MUP pension reform would not result in mass retirement because the new system would not create separate retirement regimes for different categories.

“Everyone gains something. Everyone shares something. That is the key principle of this reform,” Salceda said.

Salceda said the Ad Hoc Committee is eyeing to hammer out a final version of MUP pension reform before the proposed P5.768 trillion national budget for 2024 reaches plenary deliberations in the House.

“We still have boxes of documents from the May to October 2021 House hearings on the reform, not to mention initial position papers submitted this year by stakeholders. So, we have enough to work with,” Salceda said.

“Pending issues include what to do with MUP assets and the management of the Trust Fund, but these are questions of detail, rather than questions of principle. The principle is shared benefit and shared sacrifice. The proposal is already win-win,” he added. —Llanesca T. Panti/NB, GMA Integrated News