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:
- 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.
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 19th 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 19th 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.
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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