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.

In a lunchtime discussion recently where retired military and businessmen were present, along with some retired legislators and former government officials, the crux of the matter was established as not a question of whether the pensions are deserved or not, but whether our government can raise the funds for it or not.

The private sector SSS is worried sick about its actuarial life, even as current president Rolando Macasaet is trying his best to make life better for members through recent measures as reducing the service fees charged by accredited collecting banks and online payment channels.

The GSIS which Macasaet headed during the last three years of the Duterte administration is in better actuarial shape, but it is not in a position to absorb the MUP, humongous as the financial requirement is.

SSS and GSIS retirees receive an average monthly pension of 4,528 up to 13, 600 pesos each, while the MUP average is 40,049 pesos each. The disparities are so huge.

The MUP includes officers and enlisted personnel of the Armed Forces of the Philippines, Bureau of Jail Management and Penology, Bureau of Fire Protection, Philippine National Police, Philippine Public Safety College, Philippine Coast Guard and the Bureau of Corrections.

The “wa-is” among us would even comment that PNP (and perhaps BuCor personnel) should no longer receive the largesse after they retire, considering how much hay they made while the sun shone on their service or disservice.

An observation which is unfair to the upright members of an institution whose public image has been so long tainted, save perhaps for a few short years under the stewardship of one Ping Lacson.

It is similar to the joke about Bureau of Customs personnel who do not care about their salaries because each Friday is “payday” for hierarchical graft.

The MUP fiscal nightmare ballooned when PRRD increased the salaries of uniformed personnel in 2018, when today’s DOF Sec. Ben Diokno was the DBM secretary, and a member of the economic team then led by Sec. Sonny Dominguez.

But PRRD was so concerned about the plight of uniformed personnel who risk their lives when the occasion requires, and his economic managers had to bite the bullet while an obedient Congress passed the same without worrying about future fiscal repercussions.

Salceda filed a bill in 2021 to fix the pension system for MUP as it faces an “imminent existential threat” because of its current unsustainable funding which mostly comes from government borrowings.

Was not Salceda a member of Congress in 2018, after serving three years as Albay governor? Surely the House leadership also relied on this economic whiz at the time.

But, as always in this benighted land, what is done is done. Remedies are now needed before the problem becomes so big it defies acceptable solution.

I qualify “solution” because in a democracy, measures need to be “acceptable” and the most difficult part of governance is undoing what has been done, especially when it affects a sector who constitute the “protectors of the State.”

In fact, this is one reason why our people must support Constitutional changes.

The right-sizing and the right-funding of government’s humongous bureaucracy is in great part needed since the 1987 Constitution “permanently” legislated more than it should have.

Isn’t it unfair that officials of “Constitutional bodies” and the judiciary get huge pensions for life even if they served in such positions for a few years only, that being because the incumbent president of the time favored them with an appointment?

One can only hope some solution on the question of pensions can be mutually arrived at by the executive and the legislature, because a Gordian Knot solution could lead to unrest.

Which is why despite the resultant unpopularity, Pres. Emmanuel Macron of France gets my admiration for forging through with increasing the retirement age from 62 to 64 years, as a measure to stem the unsustainability of the pension system of one of the world’s most liberal democracies.

Macron insisted requiring people to work two years more before qualifying for a pension was needed to keep the system afloat as the population ages, while opponents proposed raising taxes on the wealthy or employers instead, and said the change threatened hard-won social safety nets.

In France, labor unions are strong unlike in the Philippines where the prospect of losing jobs in a weak economy (our economic managers insist otherwise) has mellowed the labor unions into meek submission.

That of course is another long story, in our country where income inequality is so rife, and where the nouveau riche even flaunt their wealth and tasteless lifestyles on Youtube.

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This writer is deeply saddened by the loss of a good man and a truly dedicated public servant — Carlos Padilla, governor of Nueva Vizcaya.

Together with Doy Laurel and Eva Estrada-Kalaw, we watched in awe when, in 1984, he defeated the grand old man of Vizcaya politics, the late Leonardo Perez, former Comelec chairman under PFM Sr.

I was then the deputy secretary general of the opposition UNIDO when we challenged the monolithic KBL and succeeded in getting 59 members out of 180, no mean feat, with little resources, fortified only by defiant courage and the memory of the murdered Ninoy Aquino.

Caloy Padilla was one of those valiant men who fought great odds and triumphed. The 1984 Batasan Pambansa elections became a precursor of the fall of the dictatorship.

The people of his province benefited immensely from this leader who brought major improvements in the lives of his constituents, particularly the vegetable farmers for whom he tirelessly worked in Congress to fund good roads that brought good value for their produce.

This writer was proud of his small role, as presidential adviser on political affairs during the aborted reign of Pres. Joseph Estrada, in helping Caloy achieve his dreams for his people.

My profound condolences to widowed Ruth, who also served Nueva Vizcaya, and their children. The country has lost another decent and dedicated public servant.