The House of Representatives has elected Albay Rep. Joey Salceda to head of the newly organized “powerhouse” ad hoc panel tasked to craft a sustainable fiscal framework for the Military and Uniformed Personnel (MUP) Pension System.
The MUP pension now has a P9.6 trillion unfunded deficit, a level which Salceda referred to as “unsustainable.”
He said by 2035, this “would already account for two-thirds of the country’s target deficit, leaving us little room to hire more soldiers, modernize equipment, or strengthen training and military hardware.”
Salceda, who chairs the House Ways and Means Committee, said the MUP ad hoc panel is a “supercommittee with some of the highest-ranking members in the leadership team, reflecting the importance the House leadership places on the MUP reform.”
It is scheduled to initially meet on May 31 (Monday) to discuss the rules and assess the actual state of the pension plan.
The committee’s mandate includes “all matters related to the MUP pension system, including funding and revenue sources, management, and benefits and contribution scheme,” Salceda said.
Earlier, Salceda filed House Bill No. 9271, also known as Saving the MUP Pension Act, which sounded the alarm on a possible “total fiscal collapse” of the pension system if no reforms are immediately enacted to save it.
“The pension system has a P9.6 trillion unfunded reserve deficit, primarily because uniformed personnel do not have a contribution system and that MUP pensions are much higher than that of civilian personnel,” he said.
“This is a looming fiscal crisis. Without reforms, funding the pension scheme will become fiscally unsustainable, shrinking the economy by as much as 7.2 percent in the long-run. This is worse than what the economy sustained in the 2004 fiscal crisis and the 2008 global financial crisis,” Salceda added.
The ad hoc committee is composed of five House panels of varied jurisdictions over the MUP — Ways and Means, Government Enterprises, Appropriations, Defense, and Public Order.
“The issue here isn’t whether military and uniformed personnel deserve more or less pension benefits. Everyone who serves the country always deserves more. They deserve to be sure they will have pension, and right now, given the system, we’re not sure the country can afford it in the future,” Salceda said.
“If we can’t fund the pension system in succeeding years, salary increases for current MUP will also be in trouble. So we have to make this work,” he said, even as he assured there will be no diminution of benefits in the pension proposal.