MANILA, Philippines – Gilberto “Gibo” Teodoro said President Ferdinand Marcos Jr.’s marching orders to him as the first full-time defense chief was to fix a festering problem: untangle the country’s military pension system, which is wholly funded by the national budget.

Speaking at ANC’s Headstart on Wednesday, June 7, Teodoro promised “minimal” financial burden on the uniformed services, even as government was pushing for members of the Armed for of the Philippines (AFP), Philippine National Police (PNP), and other uniformed branches of government to start pitching in for their pensions.

The plan to reform the military and uniformed personnel (MUP) was first announced by Finance Secretary Benjamin Diokno in late March 2023. Six weeks later, during a Senate hearing on the proposal, Department of National Defense officer-in-charge Carlito Galvez Jr. said they feared majority of enlisted soldiers would just opt for optional retirement if a new scheme is in place.

The current system is quite liberal. The national government indexes pensions based on salaries of those in active service – meaning retired personnel will also receive increases in pensions whenever salaries are raised.

But perhaps more contentious is that MUP do not contribute to their pension fund. The entire retirement system is bankrolled by the national government as part of its yearly expenditure.

Diokno earlier proposed to make contributions mandatory, push the age when you may start receiving pensions up to 57 from 56, and to impose the new system on all active personnel and new entrants.

Teodoro, who has spent the last decade in the private sector, said he plans on reviewing current proposals. “We want a self-sustained pension system as possible but it needs a couple of years to load it up in order for it to be self-sustaining,” he said.

The former legislator, who was defense chief from 2007 to 2009 under then president Gloria Macapagal-Arroyo, said he also wanted to impose the same “prudential standards” expected of bankers on those who will manage the fund.

How about supposed low morale from the proposed pension plan reform? Teodoro thinks an “appeal to their patriotism” is key.

“We can appeal to their patriotism that the rest of the country will suffer if there is runaway inflation and other economic downturns because of the depletion of financial resources,” he said. – Rappler.com