Questions on pensions

THE economic managers, particularly our finance secretary, along with the head of the House committee on ways and means, are quite worried about the unsustainability of our military and other uniformed personnel pension system.

And they should.

There was a time when the armed forces had an RSBS which was tasked with managing a fund for the retirement pensions of its members, but mismanagement and corruption caused its demise.

Now the MUP pension system is funded solely by government through the General Appropriations Act, which means it is an expenditure item financed by national government revenues and borrowings.

No contributions from members while in active service now constitute a fund from which the future pensions are sourced.

Both Sec. Diokno and Rep. Joey Salceda, economists of the first caliber, are worried sick that taxpayers cannot contribute enough to continue bearing the brunt of the MUP which will continue to increase tremendously such that it will likely reach one trillion pesos 12 years from now.

In 2021, the MUP pensions reached 160 billion, and for this year, it will cost 213 billion.

The average growth rate per annum of the financial requirement is more than 12 percent, which is why Diokno estimates it will breach the 1 trillion peso mark in the next decade. By any measure of projected growth of the Philippine economy, it would be unsustainable, and some solutions must be made on the question of pensions now, before it is too late.