Tips Retirement Benefits in the Philippines: A Guide for Seniors

[Arthur Leywin]

Granted, you may still be several years away ‘til your hair turns grey, but eventually after surviving the proverbial midlife crisis, you’ll start scurrying for documents regarding your retirement benefits. Perhaps you’re also concerned that your parents have just turned 60 and wondering if they qualify for a pension or any lump sum to tide them over in their senior years.

Regardless of your reasons, we’ve rounded up the important must-dos and steps for availing benefits from the Social Security System (SSS) to ensure a smooth financial transition into retirement so you and your abuelos won’t miss out on the fun of post-work years.

SSS Retirement Benefits​

If your parents or seniors were previously employed by private companies or informal sectors, or voluntarily contribute to the SSS, they could be eligible to receive retirement benefits. This is where their hard-earned salary deductions and contributions go, ensuring that they have a financial safety net once they reach the mandated retirement age. Whether in the form of a monthly pension or a lump sum, SSS enables its old members to live a comfortable life post-employment.

While the Filipino family culture often dictates that children must provide and look after their parents in their old age, having your own savings in your senior years will help pay not only for R and R but also for typical old-age issues like maintenance medications and day-to-day sustenance. Thus, having their SSS records handy is necessary to access benefits claims and prevent financial hiccups upon entering retirement age.

Eligibility for SSS Retirement Benefits​

Although SSS offers retirement benefits to its active members, your parents must pass the eligibility criteria to be able to claim a pension or a one-time cash award.

Basically, when a member reaches at least 60 years of age and is no longer employed or working, he is automatically eligible for retirement benefits under SSS. However, some contributors, especially those in the informal sectors or microbusiness owners, may have extended their retirement age to 65 years, at which point it is mandatory that they stop working and would be eligible for a pension or lump sum amount.

Additionally, while they may have reached retirement age, they need to have made at least 120 monthly contributions to the SSS before the semester of retirement. The number of their contributions would be the basis for the amount they will receive as benefits.

Types of SSS Retirement Benefits​

SSS offers two main types of retirement benefits upon entering post-employment age:

• Monthly Pension. A lifetime cash benefit paid monthly to retirees who have paid at least 120 monthly contributions. This ensures consistent funds withdrawable from the SSS proceeds accounts.
• Lump Sum Amount. A one-time payment given to retirees who have not accumulated the required 120 monthly contributions. Good news: your parents or "abuelos" will still be given the option to complete the 120 required contributions until they qualify for a monthly pension, even if they reach 60 years old at the time of making retirement claims. However, their pension may be adjusted further until 65 years old if they decide to continue working, either as self-employed or as returning employees.

SSS Monthly Pension Computation​

The monthly pension is calculated based on the retirees’ paid contributions, credited years of service, and the number of dependent minor children (which must not exceed a brood of five). Moreover, your retired folks’ monthly pension upon reaching 60 will be readjusted if they decide to re-enter the workforce or self-employment until 65 years old, which means they may get a higher amount per month as a pension.

The computation of the SSS monthly pension involves three formulas, with the pension amount being the highest result from these formulas:

P300 + 20% of the average monthly salary credit (AMSC) + 2% of the AMSC for each credited year of service (CYS) beyond ten years + P1,000.

40% of the AMSC + P1,000.

P1,200 if CYS is 10-20 years; P2,400 if CYS is more than 20 years + P1,000.

Sample SSS Monthly Pension Computation​

Suppose the member has an AMSC of P25,000 and 30 years of service. Using the first formula, their monthly pension would be calculated as follows:

Monthly Pension = P300 + (20% of AMSC) + [2% of AMSC x 20 years] + P1,000 = P300 + P5,000 + P10,000 + P1,000 = P16,300

Additional Benefits​

If you think a pension is all they’ve got, you’ll be happy to be proven wrong.

• Automatic PhilHealth registration. Per RA 7875, they’ll be entitled to full coverage of primary PhilHealth-accredited services. And not only will they benefit from hospitalization benefits, but also their dependents who are not over 21 years old.
• 13th-month pay. Retirees surely won’t miss the fun of Christmas time with the "extra" amount they’ll receive every December on top of their regular monthly pension.
• Funeral benefits. While it’s too early to think about this, it’s comforting to know that their insurance plans may be complemented with funeral benefits from SSS for your peace of mind.

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Lump Sum Retirement Benefit​

Alternatively, if your parents do not qualify for the monthly pension due to insufficient contributions, the lump sum amount would be their go-to fund. This is a one-time payment that equals the total contributions made by the member and their employer, plus interest.

But don’t worry, you or your parents may initiate payment of the remaining contributions to qualify for the monthly pension instead. Take note that they’ll only be able to choose either a monthly pension or lump sum amount for claiming retirement benefits.

How to Apply for SSS Retirement Benefits​

1. Ensure your parent/grandparent meets the eligibility criteria.
2. Prepare the necessary documents, including a filled-out Retirement Claim Application (RCA) form.
3. Submit their application at the nearest SSS branch or through the SSS online portal.

Eligibility Criteria​

• Age Requirement
  • Optional retirement: Your retiree parent/abuelo must be at least 60 years old and no longer employed.
  • Compulsory retirement: Your folks must be 65 years old, regardless of employment status.
• Contribution Requirement. Your parent or abuelo must have made at least 120 monthly contributions to the SSS before the semester of retirement to qualify for a monthly pension. Otherwise, he will be given the option of a lump sump amount instead, which is a one-time award.

Steps to Apply​

1. Verify Eligibility. Confirm that they meet the age and contribution requirements.
2. Prepare Required Documents. Necessary documents typically include their SSS ID or two valid IDs (one with a photo and both with a signature), a completed Retirement Claim Application (RCA) form, and possibly additional documents depending on your situation (e.g., marriage certificate, birth certificates of minor children).
3. Submit Their Application. You can process their application along with them at the nearest SSS branch or via the SSS online portal for registered members. The online option offers convenience and accessibility for those unable to make a physical appearance at the SSS office.
4. Await Approval and Benefits Release. Once their application is submitted, it will be processed by the SSS. Upon approval, they should start receiving their retirement benefits, with the payment method being arranged during the application process.

Note that you can only receive either the monthly pension or the lump sum amount, not both.

Additional Tips​

• Consult the Official SSS Website. For the most accurate and up-to-date information on retirement benefits, application processes, and eligibility, always refer to the official Social Security System website or contact their helpdesk directly. This is advisable if you’re processing the retirement benefits on your parents/abuelos behalf.
• Stay Updated. Policies and procedures may change, so it's important to stay informed about any updates regarding SSS retirement benefits to ensure a smooth application process. After all, parents of older generations may not easily catch up with the latest technologies (hello, SSS app) that this agency employs these days.

 

[DadiZap]

Salamat dito TS, magagamit ko ito kapag malapit na akong mg retire!