MANILA, Philippines – Days after a proposal to reform the pension system of the country’s military and uniformed personnel hurdled a House committee, Defense Secretary Gilbert Teodoro said he had “concerns” over the bill.

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In a statement released through the Department of National Defense (DND), Thursday, August 17, Teodoro said he was against “blanket mandatory contributions for military personnel” and a move that would end the dramatic and steady increases in the pensions of retired personnel.

The House ways and means committee approved on August 15 a proposal that consolidated 12 earlier bills seeking to reform what’s been described by economic managers as an unsustainable system.

Currently, the Philippine government spends for 100% of the pensions of retired military and uniformed personnel. Spending on pensions, as of 2022, has already outpaced maintenance, operating expenses, and capital outlays.

Another controversial point is automatic indexation, which means retired personnels’ pension is automatically adjusted to that of their equivalent ranks in active service. This means that if the salaries of those actively in service increases, so do the pensions.

Finance Secretary Ben Diokno earlier warned of a “fiscal collapse” should the system remain unchanged.

The House version, as approved by the ways and means committee, makes it so that the Armed Forces of the Philippines (AFP), which is under the DND, would have a separate pension management system from uniformed personnel who are civilians.

Teodoro, who tried but failed to nab a Senate seat in 2022, said he does “not subscribe to the proposed blanket mandatory contributions for military personnel, especially for those who have already completed at least twenty (20) years of active service.”

“The President envisions a carefully transitioned introduction of any pension reform plan so that those in active service will be impacted in the least possible way. The imposition of mandatory monthly contributions without a transition phase will definitely have an impact on our soldiers,” he said.

He was also against the proposed tweaks to indexation. The House panel approved indexation for 10 years, but with a cap of 50% of the salary increases.

“It has been my position that their pensions and entitlements, including 100% automatic indexation, shall remain unchanged. Ensuring the non-diminution of their retirement benefits is the least we can do in recognition of their sacrifices to the country,” said Teodoro.

Teodoro, who took over the post in 2023, insisted that AFP personnel perform a sui generis or unique mandate. “Despite wearing uniforms and ranks similar to that of other uniformed personnel, there is no uniformity in terms of the nature of their duties and responsibilities,” he said.

Pension reform is among Marcos’ priority legislation, as spelled out in his State of the Nation Address and the Legislative-Executive Development Advisory Council. Marcos himself has not spoken much about how the pension system is to be reformed. – Rappler.com