BUSINESS
Advocates Philippines
Finance Secretary Pushes For Pension Reform Bill To Ensure Stable Retirement Benefits For Uniformed Personnel
Photo credit: DBM
In a bid to secure a more sustainable and reliable pension system for soldiers, policemen, and other uniformed personnel, Finance Secretary Benjamin E. Diokno has emphasized the pressing need for a comprehensive pension reform bill.
The proposed legislation aims to establish a pension system that is both adequate and financially sound, while also honoring the service and sacrifices of those in uniform.
Diokno expressed the government's intent to rectify the current pension system's shortcomings, which are marked by unsustainability and uncertainty.
The Finance Secretary asserted that these reforms are crucial to guarantee the prompt disbursement of just retirement benefits to active service members and retirees, all while alleviating the strain on the national budget as time progresses. His statement was issued on Tuesday (August 15,2023), coinciding with the House of Representatives' inaugural hearing on the pension reform bill for military and uniformed personnel.
Highlighting the current system's vulnerabilities, Secretary Diokno underlined its dependency on government funding, which exposes it to economic fluctuations and fiscal challenges. This dependence has led to pension arrearages of PHP 3.7 billion in 2021, PHP 32.6 billion in 2022, and PHP 5.2 billion in 2023, with a projected PHP 4.8 billion in 2024.
The Finance Secretary emphasized that the reform's goal is to design a pension system that prioritizes the well-being of active service members and retirees, while also ensuring its long-term sustainability. He stressed that the proposed framework strikes a balance between the welfare of military and uniformed personnel (MUPs) and the fiscal stability of the pension system.
One of the critical reform proposals involves the creation of Military and Uniformed Personnel Trust Funds. This innovative approach acknowledges the unique nature of military service and endeavors to provide retirement benefits that reflect the dedication and sacrifices of MUPs. These trust funds will be fueled by contributions from the personnel themselves, matched with a corresponding government contribution, and supplemented by revenues generated through the sale or lease of MUP assets.
Secretary Diokno reassured uniformed personnel that although the reform bill would require them to contribute, this approach ultimately grants them full ownership and vested rights over the pension fund. To mitigate the impact of mandatory contributions on those with significant personal loans, the economic team is exploring the possibility of implementing measures such as loan restructuring.
Diokno stressed that the formation of a self-sustaining pension fund, insulated from economic fluctuations and budgetary constraints, is essential for the government's commitment to fulfill its future obligations to retirees and their dependents. The proposal also envisions a uniform retirement age of 57 or after accumulating 30 years of satisfactory service, aimed at encouraging longer service periods and retaining experienced personnel.
Additionally, the reform proposal includes provisions for periodic reviews of pension benefits and potential annual increases of up to 1.5 percent, contingent on evaluations of economic conditions and the pension fund's actuarial status, to counteract inflation.
The proposed legislation aims to establish a pension system that is both adequate and financially sound, while also honoring the service and sacrifices of those in uniform.
Diokno expressed the government's intent to rectify the current pension system's shortcomings, which are marked by unsustainability and uncertainty.
The Finance Secretary asserted that these reforms are crucial to guarantee the prompt disbursement of just retirement benefits to active service members and retirees, all while alleviating the strain on the national budget as time progresses. His statement was issued on Tuesday (August 15,2023), coinciding with the House of Representatives' inaugural hearing on the pension reform bill for military and uniformed personnel.
Highlighting the current system's vulnerabilities, Secretary Diokno underlined its dependency on government funding, which exposes it to economic fluctuations and fiscal challenges. This dependence has led to pension arrearages of PHP 3.7 billion in 2021, PHP 32.6 billion in 2022, and PHP 5.2 billion in 2023, with a projected PHP 4.8 billion in 2024.
The Finance Secretary emphasized that the reform's goal is to design a pension system that prioritizes the well-being of active service members and retirees, while also ensuring its long-term sustainability. He stressed that the proposed framework strikes a balance between the welfare of military and uniformed personnel (MUPs) and the fiscal stability of the pension system.
One of the critical reform proposals involves the creation of Military and Uniformed Personnel Trust Funds. This innovative approach acknowledges the unique nature of military service and endeavors to provide retirement benefits that reflect the dedication and sacrifices of MUPs. These trust funds will be fueled by contributions from the personnel themselves, matched with a corresponding government contribution, and supplemented by revenues generated through the sale or lease of MUP assets.
Secretary Diokno reassured uniformed personnel that although the reform bill would require them to contribute, this approach ultimately grants them full ownership and vested rights over the pension fund. To mitigate the impact of mandatory contributions on those with significant personal loans, the economic team is exploring the possibility of implementing measures such as loan restructuring.
Diokno stressed that the formation of a self-sustaining pension fund, insulated from economic fluctuations and budgetary constraints, is essential for the government's commitment to fulfill its future obligations to retirees and their dependents. The proposal also envisions a uniform retirement age of 57 or after accumulating 30 years of satisfactory service, aimed at encouraging longer service periods and retaining experienced personnel.
Additionally, the reform proposal includes provisions for periodic reviews of pension benefits and potential annual increases of up to 1.5 percent, contingent on evaluations of economic conditions and the pension fund's actuarial status, to counteract inflation.
Aug 16, 2023
