Retired from SSS, and still working?

Image Source

Published — November 25, 2017

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 your own lawyer to address your legal concerns, if 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.

Related Topic: Imprisonment for Non-Remittance of SSS, Pag-IBIG and PhilHealth Contributions

The beauty of being an owner of a corporation is that, for being a separate person, you can work for it as its employee. You can make your corporation hire yourself to occupy a high ranking position that you yourself created. And as such, you can simply continue getting employed in such key executive position that you may have only dreamt of before, such as President, Chief Executive Officer, and whatnot. But while you are on your dream job, you fall within the compulsory coverage of our Social Security System (“SSS”), just like every other employee of any rank and duty.

Since the company is yours anyway, you have that distinct advantage of being guaranteed of your choice as to when to stop, and actually stopping when you’ve chosen to. In other words, such company executive can be employed indefinitely, barring any physical or facultative disability.

But once such executive is old enough and has chosen to retire under the Social Security System, can he still continue to enjoy his retirement benefits even while he continues his employment? The answer to that depends on when our executive chose to retire.

Retirement from SSS

Section 12-B of our Social Security Law (R.A. No. 8282) 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.

Those who fall under any of the above-mentioned criteria shall be entitled, for as long as they live, to monthly pension. The retiree, however, shall have the option to receive his first 18 monthly pension in lump sum.

If a 60-year old retiree does not qualify for pension (either monthly pension or 18-month lump sum), he shall then be entitled to a lump sum benefit equal to the total contributions he had paid, provided that he is separated from employment and does not continue paying SSS contributions on his own.

Retirement at 60 but under 65 years of age

This is commonly referred to as the optional retirement age. Since the law requires that a retiree who is less than 65 years old must have been separated from his employment, or ceased to be self-employed, our executive would then have to give up his employment in order to avail of his retirement benefits. Nevertheless, the law does not prohibit such 60-year old retiree from resuming his employment.

However, once he resumes his self-employment, the monthly pension of such retiree less than 65 years old shall be suspended. Also, he shall again be subjected to compulsory coverage and required to pay contributions [See: Sec. 12-B(c)].

But if our retiring executive opts to avail of the 18-month lump sum payment of retirement benefits, the law is silent as to the effect once the retiree resumes his self-employment. It does not state whether the retiree is required to return the 18-month lump sum payment he actually received, or even a part of it, once he gets reemployed. Moreover, his pension cannot be suspended anymore considering that the retiree already received his lump sum for 18 months.

In this regard, it then becomes noteworthy that for those who would avail of the 18-month lump sum benefits, they would be entitled to monthly pension starting from the 19^th month (which may be implied when the law says that the retirees “shall be entitled, for as long as they live, to monthly pension.”) It appears, therefore, that in such a case, the suspension of pensions shall pertain only to those accruing from the 19^th month and onwards. It would seem, therefore, that availing of lump sum payment of pensions would be more advisable if our retiring executive still has the intention of resuming his employment after his retirement in order for him to maximize his benefits.

Retirement at 65 years old

This is more commonly known as the compulsory retirement age. Here, it would be more advisable for our retiring executive to wait and not to retire yet under SSS until he is 65 years old. It is so because, for those retiring at age 65, the law (as it is worded) does not require that he must be separated from employment, unlike those retiring at the age of 60 where the law specifically declares that the retiree “is already separated from employment or has ceased to be self-employed.”

Considering that our executive who retires at 65 will not be required to separate himself from his employment even after retiring under SSS, he will remain in full control of his holdings in the company as its key officer. To put it simply, he enjoys his retirement benefits while continuing to remain in his dream job.

At any rate, the power to control his destiny still belongs to the retiring executive, as he can still choose to retire whether he is 60 or 65. It would not really matter as long as he enjoys not only his retirement benefits, but also all of his pleasant anticipations of what his senior life might still have in store for him. What’s important is that he fully understands his retirement rights, knows how to make the most out of his benefits, and be empowered even as a retiree… if he chooses to.

Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding social security and other employee welfare benefits, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

All rights reserved.