Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
Second Ri Session

House Bill No,_ 8593

Introduced by REP. JOEY SARTE SALCEDA

AN ACT
PROVIDING FOR A UNIFIED SYSTEM FOR SEPARATION, RETIREMENT
AND PENSION OF THE MILITARY AND UNIFORMED SERVICES
PERSONNEL OF THE REPUBLIC OF THE PHILIPPINES,
CREATING THE MILITARY AND UNIFORM PERSONNEL RETIREMENT
FUND AUTHORITY FOR THIS PURPOSE, PROVIDING FUNDS THEREFOR,
AND FOR OTHER PURPOSES

EXPLANATORY NOTE

The pension cost of the Military and Uniformed Personnel (MUP) is rapidly increasing
every year and pose significant fiscal burden with the continuous claims against the annual
government budget.

Fiscal risks come from the following key vulnerabilities in the system:

First, the pension of MUP is indexed to the salary of active personnel. Second, unlike
other government employees, MUP are entitled to retirement pension starting at 20 years of
service before reaching retirement age. Finally, unlike the Government Service Insurance
System (GSIS), the MUP pension is non-contributory in nature.

We recognize the bravery of servicemen and servicewomen in defending the
Constitution and the people. In doing so, what we must not do, however, is to compromise the
same nation they are defending by risking its fiscal situation.

‘The urgency of the situation is shown clearly by the size of the problem. Around P9.6
trillion is the latest estimated total funding requirements if status quo is observed according to
the updated actuarial study by GSIS.

The size of the problem will continue to expand as we recruit more MUP. MUP pension
is nine times that of the average pensioner of the Social Security System (SSS) and three times
that of the average GSIS pensioner.


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To address this staggering fiscal overhang, this bill proposes the following reforms:

Impose mandatory contributions as follows: First three years: 5% employee, 16% NG
Next three years: 7% employee, 14% NG Years thereafter: 9% employee, 12% NG, in
patity with other GSIS pensioners;

Pension indexation. Discontinuation of automatic indexation but shall be reviewed
periodically and can be adjusted to a maximum of 1.5%

Adjustments in pensionable age. MUP Pensionable age will be set at 56 years,
regardless of years of service.

Fund administrator of MUP pension. A new entity will be established to be the
administrator of the MUP fund while GSIS will act as its fund manager

Other sources of funding. Proceeds from the sale/lease of assets of the MUP and from
NG assets from Manila Bay reclamation, and other identified assets, will be sources of
additional funding,

In view of the urgency of the matter, the passage of this reform is urgently sought.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
Second Regular Session

House Bill No,_8593

treduced by REP. JOEY SARTE SALCEDA

AN ACT
PROVIDING FOR A UNIFIED SYSTEM FOR SEPARATION, RETIREMENT
AND PENSION OF THE MILITARY AND UNIFORMED SERVICES
PERSONNEL OF THE REPUBLIC OF THE PHILIPPINES,
CREATING THE MILITARY AND UNIFORM PERSONNEL RETIREMENT
FUND AUTHORITY FOR THIS PURPOSE, PROVIDING FUNDS THEREFOR,
AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

TITLEI
Declaration of Policy

SECTION 1. Short title. - This Act shall be known as the “Unified Military and
Uniformed Services Personnel Separation, Retirement and Pension Act of 2021”.

SEC 2. Declaration of Policy. — The State duly recognizes the vital role of military and
uniformed personnel in providing internal and external security, promoting peace and order,
ensuring public safety, and further strengthening local government capability, aimed towards
the effective delivery of basic services to the citizenry.

The State also recognizes the extraordinary hazards, risks, perils, and dangers that
military and uniformed personnel encotnter in the performance of their duties.

It shall therefore be the prime concern of the State to provide all military and uniformed
personnel adequate remuneration and benefits, including retirement benefits and pension.
Therefore, the State shall ensure that the retirement benefits and pension scheme of the military
and uniformed personnel is secure, reliable, and sustainable.

TITLE
Definition of Terms

SEC 3. Definition of Terms. — For the purposes of this Act:


a) “Military and Uniformed Services” shall refer to the Armed Forces of the
Philippines (AFP), Philippine National Police (PNP), Philippine Coast Guard
(PCG), Bureau of Fire Protection (BFP), Bureau of Jail Management and Penology
(BIMP), Bureau of Corrections (BuCor), and National Mapping and Resource
Information Agency (NAMRIA);

b) “New Entrants” shall refer to military and uniformed personnel from the Military
and Uniformed Services who entered the Military and Uniformed Services after the
effectivity of this Act;

¢) “Active Members” shall refer to military and uniformed personnel from the Military
and Uniformed Services in the Active Service, and those who shall enter into the
Military and Uniformed Services on the day of the effectivity of this Act;

d) “Active Service” shall mean Active Service rendered by a Military or Uniformed
Services Personnel as a commissioned officer, non-commissioned officer, enlisted
personnel, cadet, probationary officer, trainee or draftee in the Military or
Uniformed Services and service rendered by him/her as a civilian official ‘or
employee in the Philippine Government prior to the date of his/her separation or
retirement from the Military or Uniformed Services, for which armed and/or
civilian service he/she shall have received pay from the Philippine Government
and/or such others as may hereafter be prescribed by law as Active Service:
Provided, That for purposes of retirement, he/she shall have rendered at least ten
(10) years of Active Service as an officer or enlisted man in the Military or
Uniformed Services; Provided, further, That no period of such civilian government
service longer than his/her active armed service shall be credited for purposes of
retirement; Provided, finally, That service rendered as a cadet, probationary officer,
trainee or draftee in the Mili Uniformed Services may be credited for
retirement purposes at the option of the Military or Uniformed Services Personnel
concerned, subject to applicable rules and regulations;

¢) “Total permanent physical disability” shall mean the anatomical loss ot the
permanent loss of use of both hands, of both feet, of both eyes, of both ears or any
combination, or loss of mental faculties, as determined by the medical board created
for the purpose;

f) “Survivors” shall mean:

1. Surviving spouse of a deceased Military or Uniformed Services Personnel not
legally separated by judicial decree from the deceased issued on grounds not
attributable to said spouse, and such marriage was contracted during the Active
Service of the deceased; Provided, That entitlement of said spouse to benefits
under this Act shall terminate upon re-marriage or co-habitation with another,
or the commission of any of the acts amounting to “ph 7

‘physical violence”, “sexual
violence”, “psychological violence”, or “economic abuse” against the biological
or adopted children of the deceased as defined in Republic Act No. 9262, as
determined by a Board created for the purpose; Provided, further, That the
conviction of the surviving spouse of any crime which carries a penalty of
imprisonment of more than six (6) years and one (1) day, the conception of a


child after the death of the deceased, or loss of Philippine Citizenship shall
terminate the entitlement of such surviving spouse to benefits under this Act.

2. Surviving legitimate, adopted and illegitimate children of a deceased Military
or Uniformed Services Personnel; Provided, That entitlement of said children
to benefits under this Act shall terminate when such children attain twenty-one
(21) yeats of age or upon marriage, whichever is earlier; Provided, further, That
children who suffer from disability, as defined in the Magna Carta for Disabled
Persons, shall be entitled to benefits under this Act for their lifetime; Provided,
finally, That the conviction of the surviving child of any crime which carries a
penalty of imprisonment of more than six (6) years and one (1) day, or loss of
Philippine Citizenship shall terminate the entitlement of such child to benefits
under this Act.

3. In default of those mentioned in sub-paragraphs b (1) and (2) above, surviving
parents of a deceased Military or Uniformed Services Personnel who are
primarily dependent on the deceased for support, or in default thereof, surviving
siblings who are under twenty-one (21) years of age and unmarried; Provided,
That the conviction of the parent or sibling of the deceased for any crime which
carries a penalty of imprisonment of more than six (6) years and one (1) day, or
loss of Philippine Citizenship shall terminate the entitlement of such parent or
sibling to benefits under this Act.

2) “Death or physical disability in line of duty” shall refer to death, illness or injury
incurred while in the Active Service and not attended by misconduct, willfal failure,
the use of drugs or alcoholic liquor or vicious or immoral habits.

TITLE UW
Applicability

SEC 4. Applicability. — This Act shall apply to all Military and Uniformed Services
Personnel; Provided, That only the existing uniformed personnel of NAMRIA at the date of
the effectivity of this Act shall be covered thereby; Provided, finally, That, those classified as
‘New Entrants in NAMRIA shall be covered by the Pension System of the Government Service
Insurance System (GSIS).

TITLE IV
Retirement

SEC 5. Compulsory Retirement. ~The following active Military or Uniformed Services
Personnel shall be compulsorily retired:

a) Those who attain the age of sixty (60); Provided, That he/she has accumulated at
least twenty (20) years of satisfactory Active Service;

b) Those who suffer death in line of duty; Provided, That he/she has accumulated at
least twenty (20) years of satisfactory Active Service:


©) Those who incur total permanent physical disability in line of duty; Provided, That
he/she has accumulated at least twenty (20) years of satisfactory Active Service;

d) Those who are killed in action;

Those who are wounded in action and incur total permanent physical disability as a
result thereof; or

©

£) Those subject to attrition, as provided in Section 8 of this Act; Provided, That he/she
has accumulated at least twenty (20) years of satisfactory Active Service.

Those separated by the appropriate Disciplinary Board under Section 14 of this Act;
Provided, That he/she has accumulated at least 20 years of satisfactory Active
Service.

8)

SEC 6. Voluntary Retirement. — Upon accumulation of at least twenty (20) years of
satisfactory Active Service, a Military or Uniformed Services Personnel may, at his/her own
request, be retired from Active Service, subject to the approval of appropriate authority as
provided in the Implementing Rules and Regulations of this Act.

TITLEV
Separation

SEC 7. Compulsory Separation. The following Military or Uniformed Services
Personnel shall be compulsorily separated from the Active Service:

a) Those who attain the age of sixty (60) without having accumulated at least twenty
(20) years of satisfactory Active Service;

}) Those who suffer death in line of duty but without having accumulated at least
twenty (20) years of satisfactory Active Service;

©) Those who incur total permanent physical disability in line of duty but without

having accumulated at least twenty (20) years of satisfactory Active Service;

d) Those subject to attrition, as provided in Section 8 of this Act, without having
accumulated at least twenty (20) years of satisfactory Active Service; or

€) Those separated by the appropriate Disciplinary Board under Section 14 of this Act
without having accumulated at least 20 years of satisfactory Active Service.

SEC 8. Attrition. — The attrition systems of Military or Uniformed Services shall be
provided for in the Implementing Rules and Regulations of this Act.

SEC 9, Voluntary Separation. — A Military or Uniformed Services Personnel, who has
not accumulated at least twenty (20) years of satisfactory Active Service, may, at his/her own
request, resign from Active Service, subject to the approval of appropriate authority as provided
in the Implementing Rules and Regulations of this Act.


TITLE VI
Retirement and Separation Benefits

SEC 10. Gratuity and Retirement Pay. - When a Military or Uniformed Services
Personnel is retired under Title IV of this Act, he/she shall, at his/her option, receive:

a) Gratuity Pay - equivalent to one (1) month of base and longevity pay of the
permanent grade last held for every year of service payable in one (1) lump sum; ot

b) Retirement Pay - a monthly retirement pay equivalent to two and one-half percent
(2 1/2%) for each year of Active Service rendered, but not exceeding ninety percent
(90%) of the monthly base and longevity pay of the permanent grade last held;
Provided, farther, That when he/she retires, he/she shall be entitled to receive a
Iump sum equal to eighteen (18) months of his monthly retirement pay, and
thereafter receive his/her annual retirement pay payable in equal monthly
installments upon reaching fifty six (56) years of age; Provided, finally, That if
he/she dies before his/her retirement pay begins to accrue, and is survived by
beneficiaries as defined in this Act, the latter shall receive only the derivative
benefits thereunder when they accrue.

Provided, That pension payments for those retired under Title IV shall commence
immediately after their retirement from the service, except for those retired due to Attrition
under Section 5(f), Honorably Discharged under Section 5(x), and those who avail of Voluntary
Retirement under Section 6 shall only be eligible to receive monthly retirement pay upon
reaching the age of fifty six (56); Provided, further, That the retirement pay of those that are
Killed in Action under Section 5(d), and those that are Wounded in Action resulting in Total
Permanent Disability shall be computed at the rate of ninety (90%) of their monthly base and
longevity pay regardless of their years in Active Service; Provided, finally, That nothing in this
Section shall be construed as authorizing adjustment of pay, or payment of any differential in
retirement pay to Military and Uniformed Personnel Services who are already retired prior to
the approval of this Act as a result of increases in salary of those in the Active Service may
have their retirement pension adjusted based on the rank they hold and on the prevailing pay
of military personnel in the Active Service, at the time of the termination of their recall to
Active Service.

SEC 11. Separation Pay.—Except for those provided for in Section 13, when a Military
ot Uniformed Services Personnel is separated from the service under Section 7 and Section 9
of Title V of this Act, he/she, or his/her survivors as defined in this Act, shall receive a
separation pay equivalent to one-month base plus longevity pay of the permanent grade he/she
holds for every year of Active Service; Provided, That nothing in this Section shall be construed
as authorizing adjustment of pay, or payment of any differential in separation pay to Military
or Uniformed Services Personnel who are already retired or separated from the service prior to
the approval of this Act as a result of increases in salary granted to Military or Uniformed
Services Personnel in Active Service.

SEC 12, Survivorship Benefits. The qualified survivors, as defined in this Act, of a
deceased Military or Uniformed Services Personnel retired under Title IV, and Section 7(b)
and 7(c) of Title V of this Act shall be entitled to a monthly annuity equivalent to seventy-five
percent (75%) of his/her monthly retirement pay which he/she was receiving to be divided

5


among them in equal shares and with the right of accretion. Provided, that the minimum
monthly annuity to be received shall be equivalent to fifty percent (50%) of the base and
longevity pay of the permanent grade last held.

SEC 13. Benefits for Death and Total Permanent Disability in Line of Duty. — A
ilitary or Uniformed Services Personnel separated under Section 7(b) and 7(c) of Title V of
this Act shall be entitled to a monthly life annuity the amount of which shall be fifty percent
(50%) of the base and longevity pay computed on the basis of his/her actual rank held at time
of death or disability.

SEC 14. Benefits for Battle Casualty — A Military or Uniformed Services Personnel
who is killed in action (KIA) shall be entitled to a monthly life annuity the amount of which
shall be ninety per centum (90%) of the base and longevity pay computed on the basis of his/her
actual rank held at time of death or disability.

SEC 15. Separation by the Disciplinary Board. — A Military or Uniformed Services
Personnel referred to and found by the appropriate Disciplinary Board not fit for retention in
the Active Service because of substandard performance, low potentiality, doubtful integrity
and/or acts inconsistent with the best interest of the service shall be separated from the Active
Service, subject to the approval of appropriate Disciplining Authority as provided in the
Implementing Rules and Regulations of this Act; Provided, That the Disciplining Authority,
based on the facts and circumstances of the case, shall determine whether the subject Military
or Uniformed Services Personnel shall be granted an Honorable Discharge and is entitled to
receive benefits under Sections 10 or 11, as applicable, of Title VI of this Act, otherwise, all
benefits under this act shall be forfeited.

SEC 16, Disability Pension — A Military or Uniformed Services Personnel retired for
disability which is the proximate result of wounds or injuries received or sickness or disease
incurred in line of duty or as a battle casualty shall receive, in addition to the other benefits
under this Act, Disability Pension fixed as follows:

a) If and while the disability is rated 25 per centum the monthly pension shall be
2,500.00;

'b) If and while the disability is rated 50 per centum the monthly pension shall be

P5,000.00;

Tf and while the disability is rated 66 per centum the monthly pension shall be
P6,000.00;

0

d) If and while the disability is rated 70 per centum the monthly pension shall be

7,000.00;

If and while the disability is rated 80 per centum the monthly pension shall be
8,000.00;

°)

f) If and while the disability is rated 90 per centum the monthly pension shall be
9,000.00; or


g) If and while the disability is rated 100 per centum the monthly pension shall be
P 10,000.00.

SEC 17. Manner of Increase of Pension Benefits. - The automatic indexing of Gratuity
and Retirement Pay, and Survivorship Benefits with the salary of active Military and
Uniformed Services Personnel holding the same rank as the last actual rank held of the retiree
is hereby terminated for existing pensioners/retirees, those in the active service and new
entrants, Increases and/or adjustments in Gratuity and Retirement Pay, and Survivorship
Benefits, up to one and a half percent (1.5%) of the pension benefit being received by the
pensioner at the time, will be based on the recommendation of the actuary and approved by the
Board of Directors of the Fund Manager of the Military and Uniformed Personnel Retirement
Fund (MUPRF).

TITLE VIL
Military and Uniformed Personnel Retirement Fund

SEC 18. Creation of the Military and Uniformed Personnel Fund Authority. — For the
purpose of carrying out and effecting the declared policy, there is hereby created a government
instrumentality with corporate powers as defined in Section 3(n) of Republic Act No. 10149 or
the GOCC Governance Act of 2011, to be known as the Military and Uniformed Personnel
Fund Authority which shall be organized within six (6) months from the approval of this Act.
The Authority shall execute its powers and functions through its Board of Directors, in such a
manner, as will, in its judgment, aid to the fullest possible extent in carrying out the aims and
purposes of this Act.

SEC 19. Board of Directors, Composition. ~The powers and functions of the Authority
shall be exercised by the Board of Directors composed by the Chairman and President of the
Authority, and eight (8) other members to be appointed by the President of the Philippines, one
(1) of whom shall be an Undersecretary of the Department of National Defense, one (1) of
whom shall be an Undersecretary of the Department of the Interior and Local Government, one
(1) of whom shall be an Undersecretary of the Department of Justice, one (1) of whom shall be
an Undersecretary of the Department of Transportation, another three (3) from the banking,
finance, investment, and insurance sectors, and one (1) recognized member of the legal
profession. The Board of Directors shall elect from amongst themselves a Vice-Chairman.

The Members of the Board, except the Chairman and President and the Department
Undersecretaries, shall hold office for six (6) years without reappointment, or until their
successors are duly appointed and qualified. Vacancy, other than through the expiration of the
term, shall be filled for the unexpired term only.

SEC 20. Funding Sources. — Aside from the initial proposed capitalization, the MUPRF
shall be funded through the following:

a) Mandatory Contributions, — It shall be mandatory for New Entrants and Active
‘Members to contribute a percentage of their monthly compensation as their personal
share to the MUPREF, the National Government shall allocate its share in the
contribution sourced from the annual General Appropriations Act, allocated as
follows:



1, Forthe first three years after the effectivity of this Act, New entrants and Active
Members shall contribute five percent (5%) of their monthly compensation as
personal share, while the National Government shall provide an equivalent of
twenty-two (16%) as its share;

2. Afler such, for the next three years, New entrants and Active Members shall
contribute seven percent (7%), while the National Government shall provide
twenty percent (14%); and

3. For every year thereafter, New Entrants and Active Members shall contribute
nine percent (9%) and the National Government shall provide eighteen percent
(12%).

b) Additional Sources of Funding. ~ Additional funds for the maintenance of the
MUPRF shall be sourced fiom the proceeds derived from the lease, joint
development, or disposition of the assets of the Military and Uniformed Services,
real assets owned by the National Government from land reclamation projects in
Manila Bay, and other government properties identified for that purpose.

SEC 21. Termination of Other Contributions of the Same Nature. ~Upon the eftectivity
of this Act, other contributions by Military and Uniformed Services Personnel in the same
and purpose, for their retirement benefits and pension, shall immediately cease and be
subject to the provisions of this Act instead.

SEC 22. Retirement Grade. - New Entrants and Active Members of the Military and
Uniformed Services covered under this Act shall be retired in the actual grade they hold,
irrespective of their years in Active Service and regardless of the circumstances of their
separation/retirement,

TITLE VO
General Provisions

SEC 23. Retirement List. — Military and Uniformed Service Personnel retired under
Title IV of this Act shall be carried in the retired list of the applicable Military and Uniformed
Service. The name of a retiree who loses his/her Filipino citizenship shall be removed from the
Retired List and his/her retirement benefits terminated upon such loss.

SEC 24. Recall to Active Service. —

a) AFP Personnel carried in the retired list shall be subject to the Articles of War and
may be recalled at any time by the President to Active Service in the permanent
grade last held upon retirement. His/her refusal to perform such duty shall be a
ground for court-martial under Article 97 of the Articles of War and subsequent
termination of payments of benefits as determined by the court martial.

b) When recalled to Active Service, a retiree shall receive the pay and allowances of

the permanent grade last held and shall continue to be carried in the retired list and

shall be eligible for promotion in the retired list as long as he/she remains in active
status.


SEC 25. Non-encumbrance of Benefits. ~ The benefits authorized under this Act, except
as provided herein, shall not be subject to attachment, garnishment, levy, execution or any tax
whatsoever; neither shall they be assigned, ceded, or conveyed to any third person; Provided,
That if a retired or separated Military or Uniformed Services Personnel who is entitled to any
benefit under this Act has unsettled money and/or property accountabilities incurred while in
the Active Service, not more than fifty per centum of the pension gratuity or other payment due
such Military or Uniformed Services Personnel or his/her survivors under this Act may be
withheld and be applied to settle such accountabilities.

SEC 26. Accrual of Benefits. — The benefits authorized under this Act shall accrue to
AFP Personnel separated by court martial action except when non-entitlement of such benefits
is expressly adjudged by the military court and approved by the approving authority.

SEC 27. Non-diminution of Benefits. — Nothing in this Act shall be construed in any
manner to reduce whatever retirement and separation pay or gratuity or ‘other monetary benefits
which any person is heretofore receiving or is entitled to receive under the provisions of
existing law.

TITLE IX
Miscellaneous Provisions

SEC 28. Penal Clause. — Any person found to have participated directly or indirectly
in the commission of fraud, falsification, misrepresentation of facts, collusion or any similar
anomaly in the issuance of any certificate or document for any purpose connected with this Act
shall upon conviction be punished by a fine of not less than the amount defrauded but not more
than threefold such amount and/or imprisonment of not less than six (6) months and one (1)
day to six (6) years and perpetual disqualification from holding public office and from
practicing any profession or calling licensed by the government.

SEC 29. Rules and Regulations. ~ Within sixty days (60) days upon the effectivity of
this Act, the Department of Finance, Department of National Defense, Department of the
Interior and Local Government, Department of Justice, Department of Transportation,
Department of Environment and Natural Resources, Government Service Insurance System,
and the Department of Budget and Management, in coordination with the AFP, PNP, PCG,
BIMP, BFP, BuCor and NAMRIA and other relevant offices shall formulate and issue the
Implementing Rules and Regulations necessary for the effective implementation hereof.

SEC 30. Repealing Clause. — Presidential Decree No. 1656, Presidential Decree No.
1638, Republic Act No. 340, Republic Act No. 5976, Republic Act No. 6975, Republic Act
No, 8551, Republic Act No, 9263, Republic Act No. 9993 and Republic Act No. 10575, and
all laws, rules and regulations, and other issuances or parts thereof, which are inconsistent with
the provisions of this Act are hercby repealed or modified accordingly.

SEC 31. Separability Clause. — If any provision of this Act shall be declared invalid or
unconstitutional, the remaining parts or provisions not otherwise affected shall remain in force
and effect.


SEC 32, Effectivity Clause. —This Act shall take effect fifteen (15) days following its
complete publication in the Official Gazette or in two (2) national newspapers of general
circulation.

Approved,