HOUSE Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) was elected Chair of the Ad Hoc Committee on the Military and Uniformed Personnel (MUP) Pension Reform by the House plenary yesterday following a three-hour meeting between representatives of the economic agencies and the House leadership, convened by Speaker Ferdinand Martin Romualdez at the request of President Marcos.
“I thank the President and Speaker Romualdez for their trust. They wanted a working solution as soon as possible, and I think we have come up with one,” Salceda said.
Salceda emphasized that “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 adds that a “consensus between the executive agencies and the House leadership has already been hammered out. We will listen to all stakeholders to refine the version, but we have received very positive feedback about the version we have at hand.”
Salceda pointed out that the key features of the emerging version are:
1. A guaranteed annual salary increase for military and uniformed personnel at a sustainable rate of 3 percent per year for the next ten years;
2. Retaining indexation of pensions, but limiting pension increases to 50% of the salary increase for active personnel;
3. A contribution scheme where active MUP will contribute a portion of base pay, but where the government will pay a larger counterpart. Salceda says they are looking at patterning it after the deductions to civil servant salaries, at 9% for the employee, and 12% government share. Salceda adds, however, that this is still subject to deliberation, and that they could ease in the deductions through a transition period;
4. The creation of an MUP Trust Fund and a governance committee with the economic managers and the MUP services being represented;
5. The retention of almost all other features of MUP pension system.
“The MUP pension reform bill will have what I call the Three Guarantees: Sure annual salary increase; sure indexation of pensions; and sure funding for the pension system. So, the resulting reform must have those three features in it,” Salceda said.
“And it must be rooted in Three Duties: The duty of the State to compensate MUP; the duty of the MUP to save for part of their own pensions; and the duty of people to pay part of the cost of those pensions. It’s a social compact.”
“It also prevents mass retirement, because it does not create separate retirement regimes for different categories. Everyone gains something. Everyone shares something. That is the key principle of this reform.”
