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What is a Retirement Benefit?

- The retirement benefit is a cash benefit either in monthly pension or
lump sum paid to a member who can no longer work due to old age.

RA 7641 An act amending Art. 287 of PD 442 otherwise known

as the Labor Code.
This act provides for the retirement pay to qualified private sector
employees in the absence of any retirement plan in the establishment

Art. 287. Retirement Any employee may be retired upon reaching

the retirement age established in a collective bargaining agreement or
other applicable employment contract.
An employee shall be entitled to receive such benefits as he may have
earned under existing laws and any collective bargaining agreement
and other agreements provided that retirement benefits shall not be
less than those provided.

Absence of Retirement plan or agreement

An employee upon reaching the age of 60 or more but not beyond 65
and who has served for at least 5 years may retire and shall be entitled
to retirement pay equivalent to at least month salary for every year
of service, a fraction of at least 6 months being considered as one
whole year.
month salary = 15 days plus 1/12 of the 13th month pay and cash
equivalent of not more than 5 days of service incentive leaves.

Exempted from the coverage of this provision:

Retail, service and agricultural establishments or operations employing
not more than 10 employees or workers

Sec. 13, RA 8291 GSIS Act of 1997 which provides for

retirement benefits

Who is eligible for retirement benefit?

1. has rendered at least 15 years of service
2. at least 60 years of age at time of retirement
3. not receiving a monthly pension benefit from permanent total

How much is the retirement benefit?

Two options:


1. 5-year lump sum
2. cash payment

5-year lump sum

Lump sum payment shall be payable at the time of retirement plus an
old-age pension benefit equal to the basic monthly pension payable
monthly for life starting upon expiration of 5-year guaranteed period
covered by the lump sum
60 x Basic Monthly Pension (BMP) plus BMP for life starting at the end
of the 5-year guaranteed period

Cash Payment
A payment equivalent to 18 months of the basic monthly pension for
life payable immediately with no 5-year guarantee
18 x BMP plus BMP for life starting immediately upon retirement

Other features of the retirement benefit

1. Retirement shall be compulsory at age 65 with at least 15 years of
Exception: unless service is extended by appropriate authorities;
Provided that if he has less than 15 years of service he may be
allowed to continue in the service in accordance with existing civil
service rules and regulations.
2. Employees who entered service before June 1, 1977 and who have
not received any separation or retirement benefit have the option to
retire under RA 1616, 660 or 8291
3. Retirement benefit shall be paid on the last day of service in
government if all requirements are submitted to the GSIS at least 30
days prior to the effective date of retirement.

RA 1616 Take all retirement or Gratuity Benefits for retiring

Who may qualify?
1. Be in government service on or before May 31, 1977
2. Rendered at least 20 years of service regardless of age and
employment status
3. Last 3 years of service prior to retirement must be continuous
Exceptions: in cases of death, disability, abolition or phase out of
position due to reorganization.


1. The gratuity is payable by the last employer based on total
creditable service converted into gratuity months multiplied by the
highest compensation received.
2. Refund of retirement premiums consists of personal contributions of
the employee plus interest and government share without interest
payable by the GSIS.

RA 660 or the Magic 87

Who may qualify?
1. In government service before May 31, 1977 with 3 years continuous
service prior to retirement.
2. Permanent status
3. Age plus Years of service must equal to Magic 87 formula
Below 60 years old
1. Automatic Pension with Monthly Annuity for 5 years
2. Yearly 1-year lump sum for 5 years plus monthly pension after 5
60-62 years old
1. Initial 3-year lump sum after retirement plus 2-year lump sum on
the 63rd birthday plus monthly pension after 5 years
63-65 years old
1. 5-year lump sum plus monthly pension after 5 years

PD 1146
Who may qualify?
1. in service after May 31, 1977 but before June 24, 1997
1. Old-age pension
2. Cash payment
Old-age pension
Retiree must be at least 60 years old and have rendered 15 years of
service. They will receive BMP guaranteed for 5 years. After 5-year
guarantee, retiree shall receive BMP for life.


Retiree may also request to convert 5-year guaranteed BMP to lump
sum subject to a 6% discount rate.
Cash Payment
Retirees who are at least 60 years old and have rendered at least 3
years but less than 15 years of service. Those who are qualified shall
receive 100% of the Average Monthly Compensation for every year of

Average Monthly Compensation (AMC)
AMC = Total compensation during last 36 months of service or 3
years / 36
Revalued Average Monthly Compensation (RAMC)
RAMC = 170% * AMC (AMC is 1,000 or less)
= AMC + P700.00 (AMC is more than 1,000)
Basic Monthly Pension (BMP)
BMP = 37.5% x RAMC (15 years of service or less)
BMP = 37.5% x RAMC + 2.5% x RAMC x (Years of service 15)
(more than 15 years of service)
** BMP shall not exceed 90% of the AMC
5-Year Lump Sum
Lump sum = 60 x BMP; BMP for life after 5-year guarantee
Cash Payment
Cash payment = 18 x BMP; BMP for life immediately
Gratuity Pay
Gratuity pay = years of creditable service converted to gratuity
months x highest compensation
First 20 years = 1 month salary (gratuity months)
20-30 years = 1.5 months salary
over 30 years = 2 months salary


Refund of Retirement Premium

Refund = personal contributions with interest + government
shares without interest
Magic 87
Age + years of service =87
BMP (PD 1146)
BMP = .375 x RAMC (period with premium payments less than 15
BMP = .025 x RAMC x length of service
Cash Payment (PD 1146)
CP = total monthly contributions paid x AMC

Sec. 13, RA 8291 Periodic Pension Adjustment

Monthly pension of all pensioners including all those receiving
survivorship pension benefits shall be periodically adjusted as may be
recommended by the GSIS actuary and approved by the Board in
accordance with the rules and regulations prescribed by the GSIS.


A member is qualified to avail of this benefit if:
1. Member is 60 years old
separated from employment or ceased to be self-employed,
has paid at least 120 monthly contributions prior to the semester of
2. Member is 65 years old
whether employed or not
has paid at least 120 monthly contributions prior to the semester of


3. Underground Mineworkers:
Aged 55 years old
-- underground mineworker for at least 5 years (either continuous
or accumulated) prior to the semester of retirement but whose
actual date of retirement is not earlier than March 13, 1998
-separated from employment or has ceased selfemployment
-has paid at least 120 monthly contributions prior to the
semester of retirement.
Aged 60 years old,
-- whether employed or not
-- has paid at least 120 monthly contributions prior to the semester
of retirement.
1. Monthly Pension - a lifetime cash benefit paid to a retiree who has paid
at least 120 monthly contributions to the SSS prior to the semester
of retirement.
2. Lumpsum Amount - granted to a retiree who has not paid the required
120 monthly contributions. It is equal to the total contributions paid
by the member and by the employer including interest.
Monthly Pension

The monthly pension depends on the following:

1. member's paid contributions,
2. his credited years of service (CYS), and
3. the number of his dependent minor children that must not
exceed five.

The monthly pension will be the HIGHEST AMOUNT resulting from

either one of these three pension formulae:
1. the sum of P300 plus 20 percent of the average monthly salary
credit plus two percent of the average monthly salary credit for
each credited year of service (CYS) in excess of ten years; or
2. forty (40) percent of the average monthly salary credit; or
3. P1,200, if the CYS is at least 10 but less than 20; or P2,400, if the
CYS is 20 or more.

The monthly pension is paid for not less than 60 months

A member who retires after age 60 with a total of 120 monthly


contributions may be qualified to a monthly pension based on
WHICHEVER IS HIGHER of the following:
1. the monthly pension computed at the earliest time the member
could have retired had been separated from employment or
ceased to be self-employed plus all adjustments thereto; or
2. the monthly pension computed at the time when the member
actually retires.

A pensioner who retires more than once shall be entitled to the higher
1. the monthly pension computed for the first retirement claim; or
2. the re-computed monthly pension for the new claim

Dependents Allowance
1. The legitimate, legitimated or legally adopted, and illegitimate
children, conceived on or before the date of retirement of a
retiree will each receive dependents' allowance equivalent to 10
percent of the member's monthly pension, or P250, whichever is
2. Only five minor children, beginning from the youngest, are
entitled to the dependents' allowance. No substitution is allowed.
3. If there are more than five dependents, the legitimate,
legitimated or legally adopted children shall be preferred.
The dependents' allowance stops when the child reaches 21 years
old, gets married, gets employed, or dies.
The dependents' allowance is granted for life for children who are
over 21 years old, if they are incapacitated and incapable of selfsupport due to physical or mental defect that is congenital or
acquired during minority.

Benefit Payment
The retiree-member has the option to receive the first 18 months'
pension paid out in lumpsum, but discounted at a preferential rate of
interest to be determined by the SSS. The member shall start
receiving his pension on the 19th month, and every month
thereafter. This option for advance payment shall be exercised only
when filing the first retirement claim. It is only the advanced pension
payments that are discounted on the date of payment; the


dependent's allowance and 13th month pension are excluded from
the advanced 18-month pension amount.
Other Benefits
1.13th month pension payable every December
2.All retiree pensioners prior to the effectivity of RA 7875 on March 4,
1995 are automatically considered members of PhilHealth and,
along with their legal dependents, are entitled to PhilHealth
hospitalization benefits.
3.Retirees effective March 4, 1995 up to the present will be entitled to
PhilHealth hospitalization benefits only if they have contributed
120 monthly Philhealth/Medicare contributions.
1. If less than 65 years old -- the monthly pension shall be suspended and
the member shall again be subjected to compulsory coverage.
2. If 65 years old and older -- can resume employment or selfemployment without prejudice to his monthly pension and without
need for compulsory coverage.
1. Primary beneficiaries shall be entitled to 100 percent of the monthly
pension, and the dependents to the dependents' allowance.
2. If the retiree pensioner dies within sixty (60) months from the start of
the monthly pension and has no primary beneficiaries, the
secondary beneficiaries shall be entitled to a lumpsum benefit
equivalent to the total monthly pensions corresponding to the
balance of the five-year guaranteed pension period, excluding the
dependents' allowance.
Portability Law (RA 7699)
Admittedly most of us move from one job to another in a move to find a
higher pay and better career. Many government retirees have had a history
in the private sector. In certain cases, they dont have enough years of
service in the government to qualify to any GSIS retirement program.
With the help of RA 7699, otherwise known as the Portability Law,
government retirees who do not meet the required number of years provided
under PD 1146 and RA 8291 can still avail of retirement and other benefits.
Under the scheme, you may combine your years of service in the private
sector represented by your contributions to the Social Security System (SSS)


with your government service and contributions to the GSIS to satisfy the
required years of service under PD 1146 and RA 8291.
However, if you have satisfied the required years of service under the GSIS
retirement option you have chosen, you would not be allowed to incorporate
your contributions to the SSS anymore for availment of additional benefits.
In case of death, disability and old age, the periods of creditable services or
contributions to the SSS and GSIS shall be summed up to entitle you to
receive the benefits under either PD 1146 or RA 8291.
If qualified under RA 8291, all the benefits shall apply EXCEPT the cash
payment. The reason for this is that the Portability Law or RA 7699 provides
that only benefits common to both Systems (GSIS and SSS) shall be paid.
Cash payment is NOT included in the benefits provided by the SSS.