INSIDER VIEW: Our budget conundrum for ‘protecting the people, securing the state’

While hubby and I were on vacation in Batanes last May, we noticed some houses and sari-sari store fronts featuring what looked like a series of multi-colored oblong-shaped balloons outside. At first I thought could they be condoms, but when we asked the locals, they said they were plastic buoys presumably offloaded from Chinese or Taiwanese ships, which they found ending up along their shores.

Quite funny indeed, but these plastic buoys indicated how close Batanes is to China, and how vulnerable this picturesque and serene group of islands is should the big northern neighbor become more skittish. And based on stories and rumors that has been circulating lately, the West Philippine Sea may become less than pacific.

Which brings up an important issue – how prepared is the Armed Forces of the Philippines (AFP) to defend our shores? Is the Philippine military sufficiently equipped to defend the Filipino people? Do they have the wherewithal and state of the art defense equipment, or are we still dependent on hand-me-downs from Uncle Sam? For that matter, is there enough in the budget to efficiently arm the Filipino soldier with uniform, ammunition, guns, and other weapons in defense of Filipino citizens and patrimony?

Ma. Teresa Habitan

The former Finance Assistant Secretary ir urging reforms in the overly generous pension system for retired military and uniformed personnel, which is diverting scarce government funds from the budget for active duty members.

And when talking of the budget for the military and other uniformed personnel, it is high time to talk about their pension system. 

The pension system for military and uniformed personnel (MUP) is like a critical illness slowly but surely endangering the overall fiscal health of the government. Critical reforms are urgently needed.

The reasons why reforms are necessary for the MUP pension system can be broken down to a few issues:

1. It is a defined benefit system;
2. It is non-contributory, meaning the premium payments of MUP come, not from the members, but from the national government budget; and
3. It is indexed to the salary structure of active MUP.

Many other countries have MUP pension systems that have defined benefits and where premiums are also funded by government budget but almost all of them do not have automatic indexation, and when indexed, it is not to the salary of active MUP.

Indexation in the Philippine MUP setting means a general who retired 20 years ago is entitled to a pension equivalent to the salary of a general in active service now. 

The fiscal risk is that the current salary and the pension are both paid out of the national government budget.

In 2023, personnel benefits for the AFP military personnel came to P64 billion.

For the AFP military retirees, the national government authorized a pension payment of P14 billion for the first quarter of 2023; assuming that this was the same amount paid for the rest of the year, total pension payments reached P56.1 billion, or 88 percent of the amount paid to current active military personnel. 

While we, as a nation, should be grateful for the men and women who risked their lives protecting us and this country in years past — and therefore adequately compensate them for that in their retirement years — this gratitude should not be at the expense of the current crop of military and uniformed personnel.

Our current active personnel who deserve to get adequate pay and quality equipment and supplies they need to do their duty to protect our country’s borders and to keep and maintain peace, order, and stability.

Then and only then can the men and women of the AFP truly live up to their motto "Protecting the People, Securing the State".