Retired from SSS, and still working?

Photo from Unsplash | Tatiana P

This article was originally published on November 25, 2017 and has been updated to reflect recent legal developments.

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

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AT A GLANCE:

Under R.A. No. 11199 or the Social Security Act of 2018, a member who has paid at least one hundred twenty (120) monthly contributions prior to the semester of retirement and who (1) has reached the age of sixty (60) years and is already separated from employment or has ceased to be self-employed, or (2) has reached the age of sixty-five (65) years, shall be entitled to retirement benefits for as long as he lives to a monthly pension, provided that he may opt to receive his first eighteen (18) monthly pensions in lump sum, discounted at a preferential rate of interest to be determined by the SSS.

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One of the advantages of owning a corporation is that you can design your role: you may be the president, chief executive officer or other key executive, employed by your own company. As such, you remain an “employee” of that corporation and are subject to the compulsory coverage of the Social Security System (“SSS”), just like other employees.

Because you control the corporation, you also typically decide when you will stop working — meaning you may continue as an executive indefinitely, assuming no physical or facultative disability intervenes.

But the question arises: once you reach retirement age under SSS and choose to claim retirement benefits, can you continue working and still retain your retirement benefits? The answer depends on when you retire.

 

Retirement under SSS

Section 12-B of Republic Act No. 11199 or the Social Security Act of 2018, provides for those who may avail of retirement benefits under the System:

 

1. A member who is 60 years old, separated from employment or ceased to be self-employed, and has paid at least 120 monthly contributions prior to the semester of retirement; or
2. A member who is 65 years old whether employed or not and has paid at least 120 monthly contributions prior to the semester of retirement.
   1. A member who has paid at least 120 monthly contributions prior to the semester of retirement and who has reached the age of sixty (60) years and is already separated from employment or has ceased to be self-employed; or
   2. A member who has reached the age of 65 years.

 

Those who fall under the second category shall be entitled for as long as he lives to the monthly pension: Provided, That he shall have the option to receive his first eighteen (18) monthly pensions in lump sum discounted at a preferential rate of interest to be determined by the SSS.

 

A covered member who is 60 years old at retirement and who does not qualify for pension benefits under paragraph (a) above, shall be entitled to a lump sum benefit equal to the total contributions paid by him and on his behalf: Provided, That he is separated from employment and is not continuing payment of contributions to the SSS on his own.

 

Retirement at 60, but under 65 years of age

This is commonly referred to as the optional retirement age under the SSS. The law requires that a member below 65 years old must first be separated from employment or must have ceased to be self-employed in order to qualify for the retirement benefit. In other words, a 60-year-old executive must formally give up his employment before claiming his SSS pension.

 

However, the law does not prohibit the retiree from being reemployed or resuming self-employment after receiving his retirement benefits. Once he resumes work, though, the monthly pension shall be suspended for as long as he is again covered under compulsory SSS coverage, whether as an employee or as a self-employed individual. During this period, he is required to resume paying SSS contributions based on his new income or position, as provided under Section 12-B(c) of R.A. 11199.

 

If the retiring executive opted to receive the 18-month lump sum in advance, the law remains silent on whether such payment must be refunded in case of reemployment. Since the benefit was already paid in a single lump sum, there is no pension to suspend within those 18 months. However, the monthly pension that would have resumed on the 19th month after retirement may be suspended once he reenters employment or self-employment and becomes subject again to SSS coverage.

 

In practice, therefore, the lump sum option may be more advantageous for executives who intend to continue or resume working after retirement, as it allows them to fully receive the advance benefits without immediate suspension. After the 18-month period, the monthly pension will simply be put on hold while the member is reemployed, and will resume once he again ceases employment or reaches 65 years of age.

 

Retirement at 65 years old

This is referred to as the compulsory retirement age under the SSS law. At this age, the rules are notably different — the law expressly allows a member to claim retirement benefits whether or not he remains employed or self-employed. Unlike the optional retirement at age 60, separation from employment is no longer a condition for entitlement. 

 

Accordingly, a 65-year-old executive may claim his retirement pension while continuing to hold his corporate office or remain active in his business. His monthly pension will not be suspended even if he continues working, since his SSS coverage at this point ceases to be compulsory. 

 

This makes it more practical for corporate executives or business owners who wish to stay active in their roles to delay their SSS retirement claim until 65, thereby avoiding the temporary suspension that applies to those who retire earlier but continue working. 

 

In short, waiting until age 65 allows one to enjoy both continued employment and the full enjoyment of SSS retirement benefits without interruption. It is a strategic option for those who prefer financial continuity while maintaining their professional engagement in their later years.

 

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.

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