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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.
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.
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:
- 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
- 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.
- 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
- 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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Gud day, ask k lng po.. for example ung mama ko is 53 years old na so, mag.start palang ng sss so macomplete nia ung 120 contribution mga 64 or 65, tpos unemployed sya pero ng.contribute nman sya consistently until that time for ten years.. makakakuha pa rin ba sya ng pension after the 120 total contribution? pls. reply. so ok lng po ba lampas na sa 60 years old para makompleto lng ung 120 para sa pension?
Second question po. for example ung contribution lng mama ko is 500 for the first five years tpos ung remaining 5 years let say, 1760, maximum, kng ang AMSC is calculated 60 months of that last last five years, dun lng ba mag.base for the last five years for one formula na makakuha ng medu mataas na pension at the age of 64? around, 6000 + php.. so meaning po ba kahit ung first five years eh hnd mataas ung contribution, tpos ung last five years imaximum na to gain the maximum amsc para sa target na pension … tama po ba ung pag.kakaintindi ko sa calculation ? sana maenlighten po ako. thank you
Hi,
I opted for retirement with18 months lump sum at the age of 60 years old. I am now 62 years old and will be turning 63 this 2019. I am still receiving my monthly pension. Last July of 2018, I was accepted as an English online tutor. My question is, if I declare myself as self-employed, will the SSS suspend my monthly pension?
Thanks for your reply.
I have an employed P.W.D. (deaf since birth) daughter 28 yrs old. Is she entitled to a 10% allowance from my monthly pension?
75 years old na sya tumatangap pa rin sya ng pension sa SSS but still working pa RIN sa barko BAWAL ba magtrabago cla o hindi ano ho ang nasa batas
salamat po
good day atty,
i have been an sss member since 1981, and have paid my contribution for 450 months. i am now 62 years old and will continue to work until im 65 years. i just want to inquire if i can have a lumpsum of 60 months, since i did avail of my retirement at my age 60 and continue to contibute until im 65 y.o. since i will lost a lot compared to my co employee who retired at 60 y.o. and recieved 11,400 monthly pension. as of this moment he already receive a total 273,600 while mine none. thanks.
My husband is currently 64 yr old and will be 65 yr old by May 2019. He already received his 18 month lump sum..pero next year pa daw po mag start yung monthly pension nya..Legal po ba na magwork pa sya ngayon na walang SSS contribution? Or need nya mag hintay na mag birthday sya next year then saka na sya mag work? By the way, we still have 3 minor children.
Thanks po.
What is/are the penalties if one who, after reaching the age of 60, have availed the retirement pension from SSS but still employed because of mis-declarations? It is not categorically stated in the law, though.
Dear Darryl M. Ayado,
The person may be held liable for falsification of public/official document under the Revised Penal Code, which is punishable by prision correccional medium to maximum (ranges from 2 years, 4 months and 1 day up to 6 years of imprisonment).
-Atty. Arjay
Hi May I ask I’m availing my lump sum retirement pay since I’ve no beneficiary I’d like to enjoy my benefits. Apparently a company wants to keep me but consultants in papers, am I still liable to tax compensation and how much. Appreciate your assistance.
Dear Ana Paz Isabel Aliviado,
I will answer your question under the assumption that you are less than 65 years of age.
If you will be engaged as a consultant, then your client will not be obliged to declare you as its employee. As such, you may continue processing for your lump sum pension and enjoy your benefits. Though if you opt to be covered again, you may do so by declaring yourself as a self-employed individual, where you will again be required to pay monthly contributions until you reach the compulsory retirement age of 65.
As for tax liabilities, your income would still be subject to it. But since you would be earning as self-employed individual, no one will withhold taxes from your earnings. Thus, you yourself have to be the one to file your income tax returns and remit your payments.
-Atty. Arjay
PRINCE SAYS:
TO: ATTY. ARJAY,
mayroon ako kakilala na mag asawa na nag retired at the age of 60, at nag apply kaagad ng 18 month lump sum, pero pinalabas ng employer na retired na sila. Ang totoo, they still continue working as of now at the same position sa company. Legal po ba to?
Dear rodolfo calahi,
Since less than 65 pa lang sila, kung hindi sila idedeclare as retired, malamang hindi sila papayagan ng SSS mag-avail ng retirement benefits. Right there, meron agad silang malinaw na misdaclaration na ginawa, which is not legal.
Though after retiring and receiving their lump sum payments, wala naman nagbabawal sa kanila na magtrabaho ulit. But as a condition, dapat covered ulit sila ng SSS, which means magbabayad ulit sila ng contributions, saka suspended ang monthly pension nila assuming na mahigit 18 months na silang retired. In this case, legal yun kasi wala naman misdeclaration na ginawa.
-Atty. Arjay
Dear Sir / Ma’am,
Ask ko po sana kc may ka trabaho ako n nagretired n ng 60 years old nkakakuha n cia ng 18 mos. lump sum at as of now meron na rin ciang monthly pension sa SSS since nag retired cia ng 60 years old. Until now nakakatanggap pa rin cia ng monthly pension kahit 65 years old na cia at nag wowork pa rin sa company which is Cenmaco Inc. located at No. 5 Mariano Marcos St. San Juan City. May penalty po ba yun sa SSS or kelangan po n ma suspend ang pensyon nia . Tnx
Dear Leny Santos,
Dahil sa 65 years old na sya, pwede syang manatiling retired under SSS kahit na nagtatrabaho parin sya. At dahil pwede syang manatiling retired sa SSS, hindi kailangang i-suspend ang mga pensions nya.
As to the pensions na natanggap na nya before sya mag-65 gaya ng 18-month lump sum, silent ang batas sa kung dapat ba nya itong ibalik. Pero kung ang pinag-uusapan natin ay ang mga pensions na natatanggap nya ngayon, hindi yun kailangan i-suspend.
-Atty. Arjay