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More About The Philippine Retirement Pay Law (RA 7641)

Some of us have heard of the famous (or perhaps infamous) 401K of the USA, or the Old Age Pension(OAP) of the UK. But what does the Philippines have when it comes to benefits once one retires from service?

The Philippines has Republic Act No. 7641 (RA 7641), also known as the Retirement Pay Law.

Effective since January 7, 1993, this act was an amendment to Article 287 of the Labor Code of the Philippines in order to prescribe the minimum retirement benefit which companies are mandated to pay to their eligible employees. Since RA 7641 simply defines the minimum retirement benefit, companies, therefore, have the option to provide benefits more liberal than the minimum prescribed by this Act.

Companies often do this to gain an edge and be more competitive in the market, allowing them to better attract and keep the best employees.

While RA 7641 is defined to cover qualified private sector employees, there are in fact exemptions from coverage by this law. Agricultural establishments, government institutions, retail establishments employing not more than 10 employees – all of these have no obligation to provide the minimum retirement benefit under RA 7641.

For everyone else though, it may be high time to already take a closer look at the regulatory benefit under the Retirement Pay Law. Key questions that one must ask include, “When does an employee become eligible?” and, perhaps more importantly, “What benefit does it provide?”

Eligibility and Benefits

Employees who retire – not resign – at age 60 with at least 5 years of service with the company will be entitled to the minimum regulatory benefit under RA 7641. What must be noted here is that a retiring employee must satisfy the dual condition of both minimum age (Age 60) and minimum service years (5 years) to be eligible for entitlement under RA 7641.

So what then is the benefit under the Retirement Pay Law?

A brief backgrounder: the actual text of RA 7641 uses the term “one-half month salary for every year of service.”However, one should not make the mistake of thinking that “one-half month” means “50%” — because it does not.

The reason for this is that RA 7641 goes on to further define that “one-half month” includes ALL of the following three components:

  • 15 days salary
  • cash equivalent of 5 days of service incentive leave, and
  • 1/12 of the 13th month pay

Looking at just the first two components, “one-half month” under RA 7641 is clearly already more than just 50% of the monthly salary. Add the third component, and the actual benefit comes out as approximately 22.5 days pay for every year of service. This now is the minimum benefit when retiring under RA 7641.

Other Things to Note

Now that the eligibility and benefit under RA 7641 are defined, what other questions should one ask? One common question is, “Does RA 7641 also require my company to set up a formal retirement plan?”

The answer, very simply, is No.

To clarify, the purpose of RA 7641 is to prescribe the minimum retirement benefit to be paid by the company to its qualified employees. But since RA 7641 does not require a company to also set up a formal retirement plan, it becomes clear that the obligation under RA 7641 is simply for a company to pay the regulatory benefit when it becomes due.

Whether or not this payment will come from the company’s general funds or from a retirement trust fund under a formal retirement plan is a decision to be made entirely by the company.

ABOUT THE AUTHOR

Raymund Zalamea

Raymund has over 20 years of experience in retirement consulting, entrepreneurship and marketing. He manages both the actuarial and the benefits administration services for Zalamea.

Raymund has also been successful in launching an online employee portal that provides seamless processing of payroll, timekeeping, retirement savings and loans.

480 thoughts on “More About The Philippine Retirement Pay Law (RA 7641)

  1. Hello,
    I am 50 years old now and have completed 12 years of service with my company. Can I already avail of early retirement? If yes, what can I get as retirement pay? We do not have any CBA nor does our company have a retirement plan.
    I will appreciate your views on this.
    Thank you very much and looking forward to your reply.

    1. Hi Jerry,

      If you company does not have a retirement policy in place and is just confirming to the minimum retirement benefit under RA 7641, then you are NOT eligible to a retirement benefit. Under RA 7641, optional retirement is upon reaching the age of 60 with at least 5 years of service. Since you have not achieved eligibility under RA7641, then you are not entitled to a benefit yet.

      In the case that your company has a retirement policy, kindly check when are the eligibility dates. Some companies offer early retirement at age 50 with at least 10 years of service.

      If you find a policy and need help in the interpretation, feel free to email us a copy at info@zalamea.ph.

      1. Hi, just want to have a better understanding.
        From what Jerry say’s, he’s more than 50yrs old and work for more than 12 yrs in the company, is it cover by RA 4917 which states that to be able to qualify “a retiring employee must be at least 50 and has served his employer for atleast 10yrs?”
        And also this RA4917 is tax free.
        Your feedback on this will really help us to better understand this.

        1. There is no law that requires a company to pay an employee at age 50. What RA 4917 says is that for a retirement benefit to be tax exempt, the company should have a BIR registered retirement plan and that the retiring employee should be at least 50 years old with 10 years of service.

          Therefore the first item to check is if Jerry’s company has an early retirement provision or not. If yes, what is the eligibility requirement?

      2. What if the employer is not willing to pay for the 5 days SIL since it’s being availed during his/her term? Meaning the computation is only 17 days

    2. Hi. Our company president is now 56 years old & 13 years in service. She plan to retire this year end.

      We have a retirement plan managed by BDO but the still in process for BIR approval. Under the plan it requires 60 years old & at least 10 years in service. Since she is not eligible we plan that she will be paid through our operating fund. Kindly share with me your wisdom on the 4 concerns we have:

      1. Is she tax exempt considering that this is her first time for her to retire, more than 50 years old & was in service for the past 13 years?

      2. If the answer of no. 1 above is affirmative, do we need to secure BIR approval?

      3. In case not, Is there a need for the board to offer an early to make it tax exempt?

      4. Is the retirement benefit she will receive tax deductible?

      Thank you & I look forward of hearing you soon.

      Joji

      1. Hi Joji,

        1. No – because her retirement benefit under the Plan is zero (since not yet eligible). With regard to retirement benefits, the tax exemption granted by RA 4917 specifically applies only to retirement benefits paid in accordance with a BIR-approved retirement plan.
        2. n/a
        3. This is up to the board. In order for her early retirement benefit to be tax exempt, the retirement plan should first be amended to provide for an Early Retirement Benefit (at age 50 with 10 years) and then duly filed with BIR for Amendatory Tax Qualification, so that the Plan can pay out her benefit – however, adding early retirement to the plan means it will apply to any other employee allowed by the company to retire on the early retirement date.
        4. Yes.

      2. Hi,
        Herewith are our answers to your concerns:
        1. No, only retirement benefit coming from a “qualified retirement plan” is tax exempt provided the requirements of “at least age 50 and at least 10 service years” are complied with.
        3. To make the retirment benefit tax exempt, in this case the early retirement benefit, your Retirement Plan pending qualification with the BIR should have an early retirement plan provision. Assuming it does, her early retirement benefit shall be tax exempt but upon payment the BIR should have already qualififed the Plan as tax Exempt.
        In the event that the BIR has not issued the Tax Exemption approval, the Company can advance the paymnt subject to BDO approval. When the BIR approval arrives, then the Company can request for reimbursement from BDO.
        4. In the event that the Company pays the Early Retirement Benefit (not advanced payment as mentioned in #3), the amount paid is tax deductible but subject to withholding tax to the receipient.
        Regards.
        EMZ
        Actuary

    3. Hi I’m the daughter of Cesar a government employee.. my father already died three years ago.. he work more than 35 years but we only receive 400,000 plus for his retirement pay… my question is how much the total amount of the retirement pay he suppose to receive from the gsis? Hope this message will be given attention and we receive a reply as soon as possible..
      Thank you so much

    1. Hi Christian,

      Yes, our firm’s stand is that all benefits paid to the employee WITHOUT a tax qualified Retirement Plan is subject to tax even if the benefit is in accordance with RA 7641. To make the benefit exempt, then the company has to set up a retirement plan and register it with the BIR.

      1. Dear Sir,
        I am a private employee of a college institution, our company has no retirement policy, we are more than 13 to 15 employees the rest are part-time, how can I avail my retirement pay, if you stated that only company with a policy, so what for is that RA 7641. I served for almost 15 years and I am now 55.
        Please he me I want a clarification
        Thank you

        Dolly

        1. In an absence of a formal retirement plan, the RA 7641 applies therefore, in your case, once you reach 60 years old, you will be eligible to receive a benefit based on 22.5 days pay per year of service. If by that time your school has not set up a registered retirement plan with the BIR, then the benefit you will receive will be taxable. It’s best that you speak to HR and encourage your school to set up the retirement plan so that by the time you retire, the benefit you will receive will be tax exempt. Note that in case the benefit will be taxable, the rate table based on TRAIN applies.

    1. If the deceased person reached 60 years old, then the beneficiaries can claim for the retirement benefits. In case the person did not reach 60 and the company does not have a retirement plan in place, then no benefit has to be paid out.

      1. Hello. If an employee dies before reaching age 60, this means even his/her surviving family members do not become beneficiaries as you pointed out? This appears to be unfair for one who had reached the minimum number of years only to be “dis-benefitted” by such provision only in the account of death. What happens to the benefits that have “accrued” those years which was meant for the employee? Is there any rule or policy that amends that condition?

        1. If under the retirement plan of the company there is a provision for death benefit, then the beneficiaries of the deceased will receive the benefit under the plan.

          If there is no death benefit in the retirement plan, then no benefit will be paid out to the deceased.

      2. Or in another condition – if the employee has reached age beyond 60 (mid 60s) but dies before reaching the mandatory retirement, can such employee (or his/her beneficiaries) still benefit from this retirement pay? If not, then what happens to the entitlement if the deceased employee or his/her surviving beneficiaries?

    1. Are you considered a regular employee? If so, do you have a fixed monthly base salary? Assuming yes, then you are eligible to a retirement pay.

      1. Hi – to clarify, RA 7641 applies to “all employees in the private sector, regardless of their position, designation or status and irrespective of the method by which their wages are paid.” This includes those paid by results and do not have a fixed monthly rate. (ref: Rule II, of the Rules Implementing the Labor Code)

        Given the above, if you reach the minimum age and service requirements (at least age 60 and at least 5 service years), then Yes, you will be entitled to the RA 7641 benefit.

  2. Im erik sir, im employed for over 10 years in service in the cooperative and we are only 4 employees, my question is, can i avail of the said republic act?

        1. Per RA7641, “Retail, service and agricultural establishments or operations
          employing not more than (10) employees or workers are exempted
          from the coverage of this provision (RA7641).” Hence, a company with less than 10 employees but the business classification is not considered retail, service, or agricultural is still liable to pay retirement benefit per RA7641.

    1. Let’s assume that the retiring employee is 60 years old with at 10 years of service with a final salary of 50k. The company doesn’t have a retirement plan and follows a 26 a month work day, therefore the statutory benefit under RA 7641 applies.

      Step 1: Get the final daily pay (50k / 26 days) = 1,923
      Step 2: Daily Pay x 22.5 = 43,267.50
      Step 3: 43,367.50 x years of service = 432,675 = retirement benefit

      Since the company doesn’t have a formal retirement plan registered with the BIR, then the benefit is subject to withhold tax, around 30% – 35% rate. Had the company set up a formal plan, then the full benefit would have been tax exempt.

        1. In Step 1, the divisor depends on the no. of working days/monthly salary to daily salary conversion formula of the Company.

      1. Good afternoon, @RBZ I’ve read your sample computation and makes me wonder if the computation for my fathers retirement pay was correct. He serve in the gov’t for 43 yrs. and a regular employee but he was paid base sa accumulated leave credits nya lang na ndi nagamit. We are asking kung pano ung 43 yrs. of service nya ndi daw talaga kasama sa payment. Tama po ba or meron kaming habol para dito. Salamat.

        1. Please note that government employees are not covered under RA 7641. Government employees are covered under GSIS.
          Some of my discussions may not be applicable to your father’s situation.

  3. I don’t know if my question is on the right topic but i just want to know if there are any due date for the retirement pay to completely given to a retired employee.

    1. Based on the law, the benefit is to paid out in lump sum. The usual practice is for the company/trustee to pay out the full benefit to the employee within 60 days.

  4. For compulsory retirement at age 65, does it require 5 years of service tenure to qualfy for the mandated retirement benefit?

    1. Yes, our firm’s interpretation is at compulsory age of 65 years old, the employee should also have been with the company for at least 5 years to be eligible for the retirement benefit under RA 7641.

  5. Possible po ba pag naka reach ka na ng 20 years service sa company pwede kana mag retire at makuha yung retirement fee?

    1. Yes, but it really depends if your company has a retirement plan and what its eligibility dates are. But if a company doesn’t have a retirement plan in place and is just following the statutory benefit under RA 7641, then you’ll have to be 60 years old to avail for a benefit.

  6. Hi! I was told that a retirement fund cannot be invested in stocks. Is this true? Also, can you enlighten me more about the Fringe Benefits, what are taxable, what are not taxable, and how to exempt from taxes? Please, I need an urgent answer…

  7. Does the law also covers Call Center Employees?

    I’ve been working in 1 Call Center Company for more than 10 years now and I was wondering if we are also covered with this Retirement Pay law especially when I will reach 60 years old.

    1. Yes, RA 7641 covers all BPO companies as well. It would be ideal that by the time you reach 60, the company would already have a formal retirement plan in place so you avail of the tax free benefit. Otherwise, if your company has not set up a plan, then the retirement benefit due to you will be taxable.

      I would advice you to speak to HR about this to give them ample time to plan and set up your company’s retirement program.

      1. Hi RBZ,

        I,m about to transfer to a new BPO company where in they offer a retirement plan. Upon explaining to me, retirement pay will be coming to my own salary, they mentioned that every month they will deduct 10% of my basic pay, and I need to stay with their company for at least 5 years. When I ask how much will be the retirement pay after 5 years, they mentioned that it will be only 50% of the total deduction that they’ve made to my basic(which is 10% of basic pay per month), and for me to get the 100% of what they’ve deducted to me I need to render at least 20 years. Is this kind of retirement plan set up by a private company is allowable by Law? Because it’s not right that you can’t get the 100% of what they’ve deducted to you. I understand the minimum 5 years to avail the retirement plan but the amount is not acceptable.

        1. What will be deducted from you is voluntary so it’s up to you if you want to opt out. Most of the time though, the incentive for an employee to voluntarily contribute to the retirement fund is if there is a company match. It would be good to request for a copy of the policy to further understand this great incentive.

    1. Hi Grace,

      Here are the steps to take after hiring an actuarial firm / retirement benefits consultant:
      1. Retirement Plan Design
      2. Do an Actuarial Valuation (Funding)
      3. Appoint a Trustee
      4. Make an initial contribution to the retirement fund
      5. Register the Plan with the BIR

      The cost of the plan design and actuarial valuation is dependent on the number of employees.

  8. Hello I have been working 4 years and 3 months from my previous job at the food service/establishment and take note they are a big company or should I say famous restaurant with service charge. Do they have the rights for not giving us a back pay even we are working for them for how many years.?please do answer me I am seeking for a credebility of this rights.Thank You and God Bless.

  9. Per 2018 TRAIN LAW, RR 8-2018, page 16 – Retirement benefits are excluded from taxable gross income. Is this means payment in accordance with RA 7641 is set aside? or Plainly as of now, retirement benefits are purely non taxable with or without BIR registered retirement plan?

  10. Hi,
    Our company is offering an early retirement (take it or leave it option). The computation is 13 days × daily rate × years of service. Tama lang po ba yang offer nila para sa maggrab ng early retirement? Thanks!

    1. It’s really up to the employees’ to assess the options on the table and if this amount is sufficient. One important consideration though is if this early retirement benefit is tax exempt or not.

      This case is purely discretionary as it’s a one-time program of the company. If the company will want to pay this out tax exempt, then that means the company is shouldering for the taxes in behalf of the employee.

  11. I started working for a company when I was already 60 years old. After over 5 years of employment with the company I am now 65 years old. The company does not have a retirement plan. Am I entitled to the retirement benefits under RA 7649? thanks

    1. Yes. You may cite the Retirement Pay Law (RA 7641) where compulsory retirement date is upon reaching 65 years old with at least 5 years of service. The benefit shall be equivalent to 22.5 days pay per year of service.

  12. Does a part-time employee (hired only for maintenance and repair) is entitled to a retirement fee? How to compute for his length of service when he is only called on a case to case basis.

    1. The Retirement Pay Law (RA 741) covers all regular employees. Kindly check the status of this particular person who is considered part-time.

      1. To clarify: RA 7641 applies to “all employees in the private sector regardless of their position, designation or status and irrespective of the method by which their wages are paid.” This includes those paid by results and do not have a fixed monthly rate (ref: Rule II of the Rules Implementing the Labor Code).

        With regard to the length of service, what do the company’s records show? Note that his daily salary will be determined as his average salary for the last 12 months reckoned from his retirement date, divided by the number of actual working days in that particular period.

  13. hello po just want to ask if the employee reach 60-61 yrs old and been in service more than 30 yrs but he/she didn’t file or don’t have any plan yet to retire but the employer want’s to pay the employee 30 yrs of service in the company and let him/her retire na.. Is it legal or does the employer has the right to let her/his employee retire in the company?

    1. Yes it’s legal to let the employee retire under RA 7641. Under this law, optional retirement is upon reaching the age of 60 with at least 5 years of service. Therefore, it’s at the option of the employee or the employer to execute the optional retirement.

      As a note, compulsory retirement date is at 65 years old in case the optional retirement was not executed.

      In this case, because the company doesn’t have a tax exempt retirement plan, the retirement benefit that the employee will receive is subject to tax.

      1. Hi – to clarify, upon reaching age 60, the continuation or extension of service is on a case to case basis upon agreement of the employer and the employee. (ref: Rule II of the Rules Implementing the Labor Code, in particular implementing RA 7641)

  14. Good morning!
    I would to ask about the benefits and possibility of pension at the age of 55 this year. My ex-husband i would say because he didn’t come home to us anymore but i have the desire to help him out of this problem since he has no enough knowledge about this matter since he just take it for granted but we still have kids in school. I need a financial support also. Actually my husband was a seaman for 25 years in a Norwegian flagship and is manned under an /company/agency here in Makati City Phil. He worked under this company for 25-27 years, he was sick last 2015 of neck and shoulder arthritis…he was then advice to retire and he’s company had given him insurance benefits for just a minimal amount. I would like to ask if he can avail his disability pension this year since he is already at his 55th. Thank you and more power.

    1. Hi,

      Disability isn’t covered by RA 7641 (this is for retirement only) — instead, kindly try checking if your ex-husband is eligible for the disability benefits under the Employees’ Compensation Commission (they have a website that might help: ecc (dot) gov (dot) ph).

  15. Is there any legal way on how retirement benefit of a 50yrs of age and working for more tan 10yrs can be tax exempt?
    What do we need to do?

    Hope to see your response.

    Thank you!

    1. Yes. Under Republic Act 4917, a retirement benefit received of an employee who is at least 50 years old with at least 10 years of service will be tax exempt provided that the company has a registered retirement plan.

      Does your company’s retirement plan provide for early retirement? What’s the eligibility?

  16. I am an employee in a company that has a retirement plan. I am 52 years old with 18 yrs in service. I would like to know the computation of the early retirement benefits as mandated by law. Thank you.

    1. Do you have a copy of the retirement policy? If so, can you spell out the definition and benefit under early retirement.

      Note that the eligibility and benefit for early retirement differs from one company to another. Early retirement is not mandatory but instead is an initiative of the company.

  17. Our company is getting a contractor to provide janitorial services. Should retirement benefits be part of the labor cost, in addition to SSS, Philheath, Pag-ibig, SIL, and other mandated benefits? If it should be, should the Principal require the contractor to set up a retirement trust fund or have a formal retirement plan.

  18. YOu discussed retirement benefits up to 60 years old. If I retire at 65 years old, will retirement pay change?

    1. RA 7641 explicitly allows for retirement upon Age 60 or more, but not beyond Age 65. Thus, under RA 7641, if you retire at Age 65 with at least 5 years of service, the benefit formula remains the same (22.5 days pay per year of service), while the salary and service will be as of Age 65.

  19. Greetings.
    I have an employee (maintenance) who reached the age of 60. He worked fro us for 15 years. He wants to get his retirement pay, but wants to continue working with us. How do we do this? We still wants him since he’s still able to work. He said he will just sign a resignation letter, get the retirement pay, then continue to work with us. We do not have any company retirement program. Maybe he just needs the money at the moment.
    Thank you and God bless.

    1. Hi Philip, thanks for your query. After retiring this person and paying his retirement benefit, you can hire him as a consultant and no longer a regular employee. This is the common practice in many companies. With this set up, he is no longer eligible for a retirement benefit as a consultant.

      1. The other option is to have a professional service contract with him. Normally as a Consultant he
        should not have “line” authority but if the work he will do requires such line authority, so the professional service contract will be appropriate.

        1. Dear Sir ,
          I have questions , our President who is director of the company now already 85 years old and retired . Now he is asking me ( Im the Manager of the company and managing it ) for retirement benefits considering that he is receiving an annual dividend . I already inform that retirement benefits is only for regular employee and in his case he is receiving a monthly allowance and year end dividend,

  20. Sir i served the compny (school) for ;
    1) franchized school frm 2000- june2006 ,
    2) nov:2006- march 2018 (my employer decided to put up his own school)
    Both under the same employer. June 22 i turned 60 and opt to retire. School open june 11 this year. Sss forbid employment if one wishes to receive a pension. Can i receive a retirement pay? Salamat po

    1. Hi Sandra,

      If you were hired as a regular full-time employee of the school then yes, you are entitled to a retirement benefit. The benefit will be based on the school’s retirement plan if they have one set up otherwise, you should receive the minimum benefit under RA 7641 of 22.5 day’s pay per year of service. If the school has no retirement plan registered with the BIR, then the benefit payable to you is taxable.

  21. Hi,

    We need an expert opinion about our company. Currently my company wants to put up a new company and they want to transfer half of the regular employees. These are the scenarios;

    Option1: Separate and early retire pay those employees and start to zero to new company

    Option2: Transfer their retirement plan contribution from old to new company and continue their # of years

    PS: ofcourse from employees POV they want option 2 but is it possible? Given that new company will have Retirement plan too.

    Thanks!!

    1. Hi,

      Thanks for the inquiry. Your situation is common to M&A’s.

      Option 2 is more common since it costs less. Some things to note though, benefits cannot be diminished therefore, if old company has a higher benefit plan than that of the new company, then you can grandfather. We’ll need to see the plans of both old and new to give you more specifics to our recommendation.

      Option 1 is ideal but costly. It’s ideal because it’s cleaner meaning no more amending of plan and no more past service liability. Everyone starts from day 1 so you just have to worry about current service.

      Please shoot us an email at info@zalamea.ph with your contact details so we can discuss further.

  22. Hi, my father has been working as a Company Physician for one company for more than 20 years.
    But in these 20 years, he was not regularized, only contractual.
    His contract was under the Medical Provider of the Company.
    In this 20 years, there were various Medical Providers but he is still the Physician of whichever Medical Provider the Company gets.

    Just recently, he was not informed that his contract will not be renewed anymore.
    Thus, leaving him surprised and unemployed.
    He was not given a notice that his contract will not be renewed.

    My father did not have any holiday pays,13th month pay,christmas bonus etc during his 20 years of service to the company and they just abandoned him like that.

    Does the company or the company’s HR has any liability on this?

    My father is aged 62 now. And is not getting any retirement benefit from any sources.

    Thank you.

    Best Regards,

    1. Hi,

      Which entity was his employer – the Company or the Medical Providers?

      RA 7641 (as implemented by Rule II) applies to all employees in the private sector regardless of their position, designation or status – based on this, if he reached age 60 and served 5 years with the same employer, then he is expected to be entitled to the benefit under RA 7641.

      1. We have filed the case now against the company.

        The company’s stand is that they are not my father’s employers even though he has been working for them for 20+ years.

      2. Hi. I have 1 sewer and 1 cutter. I have been paying them 8k since 2009. Came 2018 i added 7k as their transpo allowance… since we transferred from malate to taguig. We have no business, never sold any of my personal tailored clothes. But now pandemic i have no source of income. So i cant be able to sustain dat amount. My sewer is 61 yrs old and asked for an early retirement. I have discussed my situation but she doesnt want to believe dat i have no cash flowing as of the moment, i can only give no more than 50k as a thank u for the service.. i gave them free stay, free foods, i add for their voluntary sss and philhealth. But this is not company. They were personally hired. No instagram selli g whatsoever. She doesnt want the amount i offered. For those yrs, i nver deducted her absences.. and paid leaves for as long as 1 mant. Gave her salary during march april even pandemic even shes not in my house.

  23. With regards to cash equivalent of 5 days service incentive leave (SIL), whether or not these 5 days SIL are exhausted by the employee, it still forms part of the minimum retirement pay?

    1. Yes, that’s correct. The breakdown of the 22.5 days pay per year of service under RA 7641 include the 5 days service incentive leave regardless if used or unused.

  24. Hi good evening! I would like to ask if an employee retired in the middle of the year lets say July, is that employee still entitled for a 13 month pay? on top of the 22.5 days computation?.

    Thanking in advance.

    1. Hi, yes the retiring employee is entitled for the 13th month pay as part of his final salary in the company. The company will pro-rate his 13th month to be released in his final pay once he/she has gotten clearance.

      The 22.5 day’s pay per year of service upon retirement at age 60 with at least 5 years of service (RA 7641) is on top of his final pay.

  25. Hi,
    are non-tax exempt retirement proceeds due to resignation subject to income tax rate, or is there another kind of tax classification covering this? (Eg similar to how some benefits are taxed as fringe benefits ). Is there such a thing as retirement tax that has a lower rate from income tax?

    1. Assuming a company doesn’t have a retirement plan registered with the BIR, then the retirement benefit the employee will receive is subject to tax. The tax rate will be based on the TRAIN income tax table that considers his year to date income.

  26. can you help me with this? Our employee has been with us since 2015. He just turned 60 this year. Our Company has an existing Pension Policy which suggests that only an employee who served 12 years shall be entitled to the Plan. Our employee will be 5 years in service on 2020. In lieu of the Company Pension Plan which our employee is not qualified, can he instead avail the retirement benefit under the Philippine Retirement Plan Law?

    1. You company’s retirement plan is not aligned with the retirement pay law. We recommend that you amend your plan to align it to the law which allows benefit payment at age 60 with at least 5 years of service.

      Without amending your plan, you’ll have to pay the benefit to the employee based on RA 7641, which is at 22.5 days pay per year of service.

      1. how do we compute if our employee is already enjoying Vacation and sick leave benefits higher than the labor code prescribed 5 day SIL?

        1. To clarify: The RA 7641 benefit says cash equivalent of 5 days of SIL, i.e. this is regardless of the company’s actual SL/VL policy. Meaning, his RA 7641 benefit should be computed straight at 22.5 days of his latest salary rate multiplied by his years of service, regardless of the company’s SL/VL benefit.

  27. I was terminated from my company. I worked for more than 5 years in the company I worked for. Am I entitled to the retirement pay?

  28. Hello
    I am a college teacher in a private school
    We are on a semestral basis so technically we only receive our salary for 10 months in a year.
    So our 13th month is computed as our earnings for 10 months divided by 12.
    My question is , will this also be the basis when I retire? Is this covered by the law? Isn’t the basis be my current monthly salary?
    Thank you.

  29. Hi. i belong to a financing business company, and they have a retirement fund in place. However the trustees of the fund invested some of the fund back to the company. is this allowed? (i.e. being a financing company, we borrow from banks and other institutions or individuals and pays interest. it appears therefore that the retirement fund for the employees is “borrowed” by the company for its financing operations). if this is not allowed, any law or regulation or fund management provisions that can be referred to and can be used as support if we raise this issue to the trustees?

    thanks

    1. If the Retirement Plan was duly filed with BIR for tax qualification, note that it is required by BIR (under BIR Revenue Regulations No. 1-68) and is stated in the Plan Rules and Regulations that “the corpus or income of the trust fund must at no time be used for, or diverted to, any purpose other than for the exclusive benefit of the officials and employees” (Non-Diversion of Funds). Also, kindly check if the retirement plan’s BIR Adjudication Letter (approving the plan’s tax qualification) includes the restriction that the trustee should not in any way use the Retirement Fund to invest/deposit in any of the employer’s business ventures.

      It is further stated in RR 1-68 that the fund may be used by the trustees to purchase any investments permitted by the trust agreement – HOWEVER, the exemption of the trust income may be denied for various reasons such as if the trust:
      1) lends any part of its income or corpus without adequate security and a reasonable rate of interest; or
      2) engages in any other transaction which results in a substantial diversion of its income or corpus

      to or from the employer.

      Thus, kindly check the “borrowing” being done against the above restrictions set by the BIR, since the trust fund should exist solely to pay or fund employee benefits.

    2. If the retirement plan has been duly filed with the BIR, note that it is required by BIR Revenue Regulations No. 1-68 and stated in the Plan Rules and Regulations that “The corpus or income of the trust fund must at no time be used for or diverted to, any purpose other than for the exclusive benefit of the officials and employees” (Non-Diversion of Funds). Also, kindly check the plan’s BIR Adjudication Letter (approving the plan’s tax qualification) if it includes the condition that the trustee should not in any way use the retirement fund to invest/deposit in any of the employer’s business ventures.

      It is further stated in RR 1-68 that generally, the fund may be used by the trustees to purchase any investments permitted by the trust agreement – HOWEVER, the exemption of the trust income may be denied if the trust:
      1) lends any part of its income or corpus without adequate security and a reasonable rate of interest to the employer; or
      2) engages in any other transaction which results in a substantial diversion of its income or corpus to the employer.

      Thus, kindly check the underlying details of the “borrowing” against the above restrictions set by the BIR, since the trust fund should exist solely to pay or fund employee benefits.

  30. Therefore, a terminated employee cannot enjoy this benefit, did I understand that correctly? I have read government definition of the this law and I cannot find anything that would include terminated employees.I cannot find a definite answer, but it implies that a terminated employee cannot enjoy this benefit.
    Is my understanding , correct?

    1. Hi,

      To check: Are you referring to an employee who is involuntarily terminated? Note that RA 7641 is a post-employment retirement benefit (one needs to be at least 60 with at least 5 years of service), while employees who are involuntarily terminated are covered by the Termination Pay Provision of the Labor Code (which provides different benefits which apply to all regardless of age/tenure).

  31. Is this retirement benefit under R.A 7641 different from the retirement benefit that will be get by the retired employee to the Social Security System? Your prompt answer will be highly appreciated. Thank you very much.

  32. hi sir,
    good day! i just want to ask if the retirement pay is different from separation pay of every employee who is entitled for the retirement pay under RA-7641?

  33. Hi po tanong ko lang po 63 years old yong father ko nag retired.23 years po xa nag work as a team leader sa mj saha rubberland agri.company.wala po siyang natanggap na retirement kc daw po abandonment of work daw papa ko.kahit alam naman at nagpaalam naman yong papa ko na mag retired na.

    1. Hi – the company should have processed his retirement since he was already legally entitled to the RA 7641 benefit. Kindly call/email the Department of Labor and Employment (DOLE) to check if there’s a way your father can get his RA 7641 retirement pay.

  34. Good Morning Sir/Ma’am.
    I will be 60 yrs old this November but I am with the company for only 8 years. Will my retirement pay be tax free?
    Thank you very much and looking forward to your utmost reply.
    Regards,
    Mel

    1. No, because in order for any retirement pay to be exempt from tax: 1) it must be paid from a retirement plan that’s been duly registered with the BIR; and 2) the retiring employee must have been in the employer’s service for at least 10 years and is not less than 50 years of age at the time of retirement.

  35. Hello!
    our Condo Corporation has just renewed its contract with our security agency. I noticed that the security agency is charging us around 900 pesos monthly per guard for “retirement benefit” and quoting RA 7641. Is it right for the agency to charge this to us? I have been contesting it since I feel we are not the employer of the guards. Plus, if we decide to change security agencies say after 2 years, what happens to the retirement benefit that they charged us? Can we make the agency return said amounts to us since they are essentially, “not retiring” with us.
    regards,
    Grace

  36. I’m 65 years old i still work in the company voluntary inspite of my age but the company requires me to retire .I’m willing to retire now i would like to ask if i still need to submit RESIGNATION LETTER ? I believe that resignation letter is applicable only to those do not reach the retiring age . Thank you for immediate reply

    1. Kindly check with your HR about the procedure, since given your age (and assuming you also have at least 5 years of service with the company) it is expected to be retirement, not resignation.

  37. Hi. Is driver which is paid on a task basis entitled to retirement plan law? Another question is, if they already have a retirement benefit on SSS, will they be still entitled to the aforementioned law? Thank you very much.

    1. Yes, given that RA 7641 also covers workers who are paid by results and do not have a fixed monthly rate. And yes – the benefit entitlement under RA 7641 are separate and distinct from the benefits granted by the SSS. For added reference it is recommended that you download the DOLE handbook (available from their website).

  38. What about an only employee? What benefits shall he/she receives upon retirement considering he/she has worked for more than 20 yrs and no retirement plan?

    1. If said employee with 20+ years attains age 60 while working for the company, then said employee should be entitled to the RA 7641 benefit from the company. Retiring prior to reaching age 60 means RA 7641 will be N/A.

  39. Why is it that the 22.5 days is base on a 26 days/monthly salary?Shouldn’t it be base on 30 days given the original retirement is 1/2 0f monthly pay which is 15 days out 30 days per month? 1/2 monthly pay should then be 13 days out of the 26 days per month.

    1. RA 7641 defines “one-half month salary” as the sum of all of the following: 15 days + cash equivalent of 5 days of service incentive leave + 1/12 of the 13th month pay = 22.5 days. The minimum retirement benefit should therefore be computed using 22.5 days of the latest salary rate. You may also look to the DOLE Handbook for added reference.

      1. Hi. If the policy states that it is one month per yr of service, how is it computed? 26 days plus 5 days SIL plus 1/12 13th month?

  40. Hi sir, my company offered last year to us employees with 20 years of continous service may “opt “ for early retirement, which i grabbed this year. They have a retirement program thru a retirement fund where i recieved mine. I am only 45 y/o. My question is, am i not eligible of the compution stated in the retirement pay law? Thank you.

    1. If the company has no formal retirement plan, then RA 7641 (as implemented by Rule II of the Rules Implementing the Labor Code) applies to “all employees in the private sector, regardless of their position, designation or status” — thus, call center employees will be entitled to the RA 7641 benefit provided they reach age 60 and render at least 5 years of service with the employer.

  41. Hello, can you please advise me on what my retirement expectation would be considering I was employeed for 6 years then left the company for 20 years but returned for another 10 years.
    should I get the full 16 years retirement?
    or only the 10 years benefit?
    Thank you

    1. Hi – if you were rehired as a new employee, then 10 years; if the company decides to recognize your prior period of service with them, then 16 years.

  42. Hello,

    My services are needed by another company even after my retirement at age of 60. Will I get another retirement package if I reach 65 years in another company?

    Thanks for your utmost reply.

    Regards,

    Mel

    1. Hi,

      Assuming the new company has no formal retirement plan: if you complete the minimum service requirement of 5 years with the new company, then Yes, you’ll be entitled to receive the RA 7641 benefit from the new company.

      However, if the new company has its own formal retirement plan, the answer will depend on the provisions of said formal plan.

      1. Retirement benefit under RA 7641 requires at least 5 years of service and at least age 60.
        Yes, if the Company has a formal Retirement Plan then follow its provisions. Note that the formal Retirement Plan needs to be qualified as tax exempt with the BIR.

        1. Hi i am lecturer in private university. Iam more than 60 years old and the school retires me with 4 years and 4 months service. What are the retirement benefit that i can avail? Thanks

          ERR

  43. Hello!

    I am 40yo and the company I am currently working in offers early retirement benefit, given rendered at least 10yrs of service (BIR registered). Given its not under RA 7641 ruling, and its taxable, how much tax will be applied under Train Law to a monthly salary of P40K, one month/yr of 10years work?

    Thank you very much for your reply!

    ARM

    1. Sir, may i ask, the company plan states that the normal retirement age is 60 years old and for early retirement is when an employee reaches his/her 20th year of service. the company computes the retirement using, daily pay x 22.5 multiplied to number of years of service. what if the employee who is 50 years old retires after 13 years of service, but did not reach 60, can the labor law computation of 22.5 multiplied by 13 years of service be used in the computation of the benefits? the plan did not state below 60 years old retirement age.

  44. Sir I would like to ask these questions for enlightenment:

    1. does a 65 yr old employee with 4 yrs in service can claim retirement benefit mandated by law? (referring to RA 7641)

    2. if we are going to follow the minimum retirement benefit without considering any retirement plan, where can we find the Tax Table for this?

    3. What are the requirements/law (if there are any) as to where we can get the funds for the retirement benefit considering what is mandated by law as per RA 7641?

    4. is it necessary to be connected with an insurance company who caters retirement plans iF we decide to have one or we can make up our own?

    5. if it is okay to set up our own retirement plan, what are the steps to make it valid and to apply for tax exemption for the said plan?

  45. The tax exempt can be availed only by employee and or employer once he/she retired? Is the retirement fund set up by the company is consider as expense and therefore is also tax deductable in quarterly or annual income tax return?
    Thank you

    1. Hello,

      1. Yes, since tax exemption of benefits applies only when benefits are paid out (i.e. upon retirement, subject to eligibility conditions).
      2. If the Company’s retirement plan is formally filed with the BIR for tax qualification, then Yes, this means the Company’s contributions to the retirement trust fund will be deductible from its gross income [ref: Tax Code of 1997: Chapter VII, Sec. 34(A)(1) and Sec. 34(J)].

  46. Good day i have only 4 employees in my business. And i have a driver who ia turning 60 this coming December is he eligable for retirement pay? Because the article said that the company who hire below 10 emplyees the employer have no obligation to give retirement pay? Just want to make sure Thanks

    1. Is your business classified as a Retail, Service, or Agricultural establishment/operation?
      => If Yes, then you’re correct – no obligation to give the RA 7641 retirement pay as long as you regularly employ at most only 10 employees. When your employee count hits 11+, the RA 7641 obligation will already apply.
      => If No (meaning your business is a different classification), then the RA 7641 retirement obligation exists regardless of employee count.

        1. Is your business engaged in Wholesale of goods?
          => If No wholesale, then RA 7641 does not apply.
          => If Yes, then it’s not considered a “Retail Establishment” – meaning the RA 7641 benefit obligation applies.

          (ref: Rules Implementing the Labor Code, specifically Rule II which implements RA 7641)

  47. I recently submitted a notice of my retirement being 61 years old and have completed 15 years of service in a private company. We do not have our own retirement plan so I am looking at the provisions of the law. My last working day will be on 31 December 2018. When should the company give my retirement benefits? Thank you.

  48. All regular employees are entitled to retirement benefits. However, what if for actuarial valuation the employer submits only those employees with more than 2 years of service only will this affect the benefit obligation.

    1. Yes – and actually, the benefit obligation will be understated. Plus, the headcount might be questioned on the audit side. Note also that if those with <2 years are excluded now, then suddenly come in next time with 2 years of service, this would cause a jump in the benefit obligation.

  49. I’m 49 yrs old regular employee in a private company just want to ask f i can avail an early retirement and get paid for my 23yrs in service. If yes what should i do our company has no CBA and also no retirement plan.Pls i need ur help and thank u

    1. No – because unfortunately, the Company has no obligation to pay any early retirement benefit since there’s no plan, and the Labor Code does not provide any statutory early retirement benefits.

  50. Dear Sir,

    Im 56 yrs old and my 10th year will be on jan 2019 . Am I entitled for the retirement plan ?
    However i resigned last Nov 1, 2018? Can i avail of the plan?

    1. Does your Company have a formal plan, policy or CBA providing early retirement benefits (early meaning prior to age 60)?
      => If No, then no entitlement.
      ==> If Yes, then it depends on the eligibility requirements. Note though that if you resign before becoming eligible, then there’s no benefit entitlement.

  51. Hi. This Joyce. My father is a bus driver and he retired from his company last month. He worked with the said company for 21 years and according to thier computation of his retirement benefit, my father wont receive any amount because of his bus accidents expenses. Is there anyway we can protest to the company on why my father need to shouldered all the expenses since PUVs have insurances..
    I will appreciate your views on this.
    Thank you and looking forward to your reply.

  52. ako po ay may 15 years sa service at ako po ay na awol meron pa rin po ba akong makukuha sa aking service. salamat po

    1. Please check the retirement policy of your company if you are eligible given the situation. In most cases, the computation of credited years of service in the company excludes the leave of absence without pay.

  53. Hi i have question po ang father ko po kasi is magretire na then nag ask po sya sa company if magkano makukuha nya..Sabi po 10k lang daw for 14yrs service kasi according daw po sa dole 8 employee lang daw po ang meron sila? my father is a water tender..Thank u

    1. How old is your father? If he is less than 60 years old, he is not yet eligible for a benefit under the retirement pay law (RA 7641).

  54. Hi is it necessary that retirement fund will be set aside through a fund manager like that of bank trust? or can it be taken up in the books as restricted fund?

    1. It is okay for a company to accrue funds for purposes of retirement however this will not be tax deductible. For a company contribution to the retirement fund to be tax deductible, it has to be contributed to a Trustee, which more often than not are banks. For a company to get a tax exemption letter of the retirement fund, a trustee is required.

  55. May I know if the beneficiaries of a deceased employee who died at the age of 56 would receive the early retirement benefits from the company even if the employee didn’t apply for it? The company has early retirement plan.

    1. If the company’s retirement plan has a provision for death benefit, then yes, the beneficiaries will be eligible for a benefit defined in the retirement plan.

  56. May i know if the beneficiaries of a deceased employee who died at the age of 56 would receive the early retirement benefits from the company even if the employee didn’t apply for it? The company has early retirement plan.

  57. Sir,

    im 39 yrs old and my 19th year will be on april 2019. however i render my optional retirement last november 20,2018 and we will have retirement benefit policy and guideliness.
    can i avail optional retirement plan? please i need your help and thank you.

    1. Please refer to your company’s retirement plan and see if you are eligible to receive a benefit. If ever you are eligible for a benefit under the retirement plan, it will be taxable since you are less than 50 years old.

      1. Sir pls consider the case,19 years of service but less than 60 years old shall the company follow the 22.5 per year of service or just give whatever benefits was accumulated for him. If the company has retiremnt fund for every rmployee.

  58. Hi,

    If a company asked employees to sign a document stating an employee is eligible for a non-contributory retirement fund as part of employees compensation and benefits. Does that mean my retirement plan ang company?

      1. I already talked to them. wala daw retirement plan ang company. nung tinanong ko sila para saan yung pinasign nila sa akin ende nila nasagot dahil yung former hr manager daw ang may hawak nun.

      1. Depends on the Company’s retirement plan provisions – i.e. if the retirement plan explicitly provides a separation benefit based solely on attained age (regardless of length of service), then your entitlement will depend on your age at separation/retirement.

    1. Hi I just to clarify the excemptions from RA 7641 is defined to cover qualified private sector employees, there are in fact exemptions from coverage by this law. Agricultural establishments, government institutions, retail establishments employing not more than 10 employees – all of these have no obligation to provide the minimum retirement benefit under RA 7641.

      Our company is Private Recruitment Agency , are we covered under Retails Establishments ? if not , who are the companies under this ?

      1. RA 7641 does exempt small Retail, Service, and Agricultural Establishments from coverage.

        Note that as defined in Rule II of the Rules Implementing the Labor Code, a Retail Establishment “is one principally engaged in the sale of GOODS to end-users for personal or household use. It shall lose its retail character qualified for exemption if it is engaged in both retail and wholesale of goods.”

        In contrast, a Service Establishment “is one principally engaged in the sale of SERVICE to individuals for their own or household use and is generally recognized as such.”

        [emphasis added for easier reference]

    1. The amount of processing time is not specified in the law / implementing regulations, only that entitlement is immediate, i.e. “UPON reaching the age of 60 or more if he has served for at least 5 years in the establishment.”

      Companies with a formal retirement plan normally state that benefits shall be paid in a single sum anytime within sixty (60) days from the date of withdrawal from the retirement plan.

  59. Hi I just want to clarify. I 60 yrs old when i was hired by a company in a contractual for 2 yrs. After Two years my employment status was change to regular. We have a retirement plan and states that membership will commence upon regularization. I am now on my 65 and wants to retire. Can I still avail the retirement pay? and how many years will be counted? Does it include my 2 years as contractual? Please help

    Malou

    1. The minimum retirement benefit under RA 7641 applies to all employees in the private sector “regardless of their position, designation or status and irrespective of the method by which their wages are paid.” Thus, based on the info provided, you are entitled to at least the RA 7641 benefit.

      The question of entitlement to the Company’s Retirement Plan benefit (and number of credited service years) will depend on what is set out in the Company’s Plan Rules and Regulations. Thus, your benefit entitlement will be either the formal Plan benefit or the RA 7641 benefit, whichever is higher.

      Note: If the formal Plan benefit (which is payable from the retirement trust fund) is less than the RA 7641 benefit due to you, the Company is required to pay the difference.

  60. Hi,

    I would like to ask if you are still entitled to this if:

    The company doesn’t have an early retirement plan and my father is 52 planning to retire. Is he still able to get his benefits given that the company doesn’t have a plan?

    If he can’t get the benefits not until 60, is there any other way to get the benefits while he is 52?

    Need enlightenment on this.
    Thanks in advance.

    1. Benefit entitlement depends on age and/or service years at retirement/separation, rather than age at hire. Please check with HR if the company has a retirement plan that provides any separation benefits based solely on service years rendered (regardless of age).

      1. Ask ko Lang po,Kung Tama po ba ung computation Ng company na 15 days every year of service Ang ibabayad sa Amin?
        Pano po ba Ang pagkwenta 29 years na po ako sa company,pinagvoluntary resignatipn po kami lahat sa company dahil po sa pandemic.Hindi po talaga Kasama Ang 13th month?

  61. Hi linlie im 45 years of age and employed almost 15years in my company now as branch motor cycle tech. Im asking for early retirement plan of my company im eligible for this early retirement plan

    1. It would be best to speak to HR and ask if the company has a retirement plan in place. If so, then understand the eligibility dates of the plan to see if it offers early/optional retirement.

    1. Yes. The Retirement Pay Law (RA 7641) illustrates how the minimum benefit is computed which includes the 5 days service incentive leave. This is regardless of whether it has been used or not.

        1. Is the criteria for five years – regardless of employment condition.. example two years contractual and 3 years+ regular continuous 5 years intotal. Thanks

          1. It’s usually based on the date of hire as a probationary/regular employee and not as contractual or project.

  62. Hi, my Auntie work for the company for 6mos then, transferred to another company. However, she was asked by her previous company to work with them again so, she returned and now is 4.5yrs in the company.

    If she retires now, would the 6mos previous service be computed as part of her entire service in the company? They don’t have any policy about how to compute it as well.

    Thank you.

  63. Hi!
    I would like to inquire if there is a law if how long shall d employee wait for his retirement benefit if he retired from a company,
    My husband applied for retirement at d age of 63 last January 4, 2019. Until now he did not received his retirement because according to d company, the ball is in d BDO already because they are the one handling the retirement plan.
    Can d company cannot pay d retirement benefit or they should be d one to pay first and let d BDO reimbursed. Is there a law for d waiting time of the retirement benefits.
    Hoping for your immediate response.
    Thank you.

    SPW

    1. Hi, this should be defined in the company’s retirement plan rules and regulations. Usually, the plan rules states that the release of payment is done within 90 days.

  64. Hi. We have an engineer whom we want to retire who has served 25 years with the company. He is not yet 60 but he is not efficient and/or effective in the company anymore. We just want him to leave. How do we go about giving him his retirement pay. Is it the same as separation pay? That employee is asking for a bonus and for the apartment that we let our staff and family to stay in while they are working with us.

    1. i’m assuming you do not have a retirement plan that allows for early retirement before 60 years old, therefore you can probably offer him a separation pay/redundancy package. If would be best to speak to a labor lawyer if this engineer can be made redundant so that he is paid out 1 month’s pay per year of service and is tax-exempt.

    1. Yes, that’s management discretion. As long as expats are classified as regular employees in your company then they can be eligible to receive a retirement benefit.

  65. Does the law require a specific timeline as to when the separation pay should be given to the retired employees? If the company promised to give their separation pay on a certain date (2weeks after last day) and they failed to because some excuses, what can the employees do to demand for their promised checks?

    1. None specified; however, if the company has a retirement plan, the maximum timeline will be explicitly stated in the plan rules and regulations.

  66. Hi. Good day! Based on my understanding, the retirement pay is computed as (daily rate times 22.5 times 12 months times no. of years of service). If I have a basic rate of P15,000/month and allowance amounting to P5,000, resulting to a gross monthly pay of P20,000, for computation ng retirement pay, ano po magiging basis ko ng pag-compute ng daily rate: 15,000 or 20,000? I will highly appreciate your response on this. Thank you.

    1. Note: The retirement pay under RA 7641 is computed as Daily Rate × 22.5 × no. of years of service.

      The minimum benefit payable is based on the latest basic rate; the inclusion of allowances in computing the retirement pay will depend on what’s defined in the plan rules (if with formal plan) or company policy.

    1. According to the Handbook on Workers’ Statutory Monetary Benefits – Yes, i.e. “Persons in the personal service of another are entitled to retirement benefits pursuant to Department Order No. 20 series of 1994.”

      Formula follows RA 7641.

  67. Can an employee use a partial amount of his retirement benefit even before submitting a formal retirement plan? e. 3 years before retirement?

      1. This will depend on whether the company even has a policy or plan provision for this; on the other hand, it should be pointed out that companies with formal retirement plans always include a standard clause that the Company shall have the first lien upon the amount standing to the credit of its employee-member to cover all liabilities of the employee-member to the Company.

  68. Hello po. Pls help. My mother reached 60 years last Nov 4, 2019. But up to now, nagre report pa sya sa trabaho dahil inaasikaso pa daw po retirement nya ng admin nila. Ang industry nya nya ay garments, factory sewer po sya at piece rate po ang trabaho nila. Naga apply pa din po ba itong est.22.5 days per year of service na computation? Kasi yung company po nila problematic din..di sumusunod sa mga batas. Ang binibigay lang sa mga nagre retire ay parang “pabaon” lang daw po..salamat po

    1. Yes – RA 7641 (22.5 days of the latest pay per year of service) also applies to workers who are paid by results and do not have a fixed monthly rate.

  69. Hi, my employer is a corporation, did not set up retirement plan for employees. What are the factors that a company “NOT QUALIFIED” to pay retirement benefit? If they decided to pay the retired employees, what is the computation? Is it true that being a small corporation only minimal amount of benefit to be given/paid to retired employees?

  70. Good day i am at the age at 50 years old. And i am planning to avail the voluntary retirement (optional) due to personal issue. is it possible? does my company pays me a fair computation ?

    1. Please refer to your company’s retirement plan and see if you are eligible to receive a benefit because if your company doesn’t have a retirement plan and is just invoking the Retirement Pay Law (RA 7641) then you are not entitled to any benefit.

  71. hello, my company hires a security guard from an agency, in the contract we, the principal was asked to pay the retirement pay other than the other monthly contributions, we are not clear on the matter whether we are liable to pay the retirement pay of their employees since we are not their employer and only their client. Please do help me with this issue.
    thanks

  72. Hi,
    The principal in our private school died at the age of 53 and has been with us for 35 years. What benefit can his legal heir/s received from the school? (Retirement and/or death benefit). If the heir is entitled, how much of the employee benefit? (e.g. 30%, 50%, 100%). Who are the legal heir/s, their hierarchy and % entitled? Thanks

    1. Does your school have a retirement plan in place? If so, please refer to that document. If no retirement plan, then it’s the school’s discretion since there’s no law mandating to pay for death benefit.

      1. Hi,
        I’m sorry I made a mistake on the age. He died at the age of 63 not 53. He is more than the retirement age of 60 but less than the mandatory retirement of 65. There’s no retirement plan and death benefits in place in the school. He is still in service when he died.
        Thanks

  73. The principal in our private school died at the age of 63 (not 53) and has been with us for 35 years. What benefit can his legal heir/s received from the school? (Retirement and/or death benefit). If the heir is entitled, how much of the employee benefit? (e.g. 30%, 50%, 100%). The school has no retirement plan in place. Thanks po.

    1. Since there is no plan in place, note that there is no law requiring a private entity to provide death benefits (only retirement has a minimum regulatory benefit), so the death benefit amount to be paid out, if any, will be at the school’s discretion.

    1. If your company has a retirement plan, your applicable retirement pay will be computed in accordance with the plan’s provisions; provided, that if you have served the company for at least 5 years, then your retirement pay will be the higher of the Plan benefit or the RA 7641 benefit.

  74. Hi, my inquiry is regarding my husband’s status right now. He is turning 64 yrs old this July & still employed, i understand that when he reach the age of 65 yrs old he will already be receiving his monthly pension. My question is…what happened to his supposedly monthly pension at the age of 60 that was suspended due to his employment status. Will it be given to him as lump sum frm the time he turned 60 up to 65 yrs old? Thanks.

    1. The retirement benefits, whether under the company’s retirement plan (if any) or under RA 7641, are payable upon retirement, not while one is still an employee. This benefit is paid in a lump sum.

      Remark: Note that the lump sum retirement benefit provided by the company is separate and distinct from the monthly pension granted by the SSS, so the conditions of payment will depend on the respective regulations.

    1. If your company has a retirement plan, the treatment of fractions of a year will depend on the plan’s provisions; if no plan, the company is not required to include fractions of less than 6 months in computing the retirement pay.

  75. Hi, very interesting and helpful article. I’m curious, based on your article here, i’m required to give my employees retirement plans and very timely a friend of mine is offering VUL-insurance plan as a retirement plan for my employees. Said it can be used as a qualified retirement plan and can be recognized by “BIR” for tax incentive purposes. My questions are:

    1. I know trust funds and savings, but VUL insurance – can this be used?
    2. Who should coordinate with BIR – me or the company I availed the plans from?
    3. Are there any guidelines, other than the RA 7641 you mentioned above, I can use for reference?

    Thanks in advance!

    1. 1. Given the structural differences between a retirement trust fund vs insurance product, it’s recommended that you look further into the process that the particular insurance company has with regard to that type of retirement plan qualifying for tax exemption.
      2. Filing with BIR (i.e. submitting the necessary documents and having them stamped “Received” by the BIR) can be done by anyone, since the required docs are regardless of who does the filing – in our case, BIR Filing is one of our special services so it does have its own separate fee. Note that some documents will be c/o the company while others will come from the insurance company.
      3. Regarding the tax qualification of retirement plans, the key references are RA 4917 and BIR Revenue Regulations No. 1-68 and No. 1-83. The BIR Form 17.60 is also useful, and will be one of the documents needed.

  76. Hi, I am clear about the 22.5 days per year of service retirement benefits under RA 7641 if I retire at 60 years old next year having in the company for 15 years. By I am still not clear if the retirement benefits is tax-exempt or not. Our company does not have a private benefit plan in place. Would that mean it is taxable? Is the private benefit plan approved by BIR is the only element to make the benefits tax-exempt? How about the other elements like at least 10 years in service and is not less than 50 years old and retiring employee not having availed of any private plan before? Why the law will not consider the two other elements to make the benefits tax-exempt in absence of the BIR-approved private benefit plan? It’s not making any sense to me. Please help me understand.

    1. Unfortunately, it is explicitly stated in RA 7641’s Rule II (Implementing Regulations of the Labor Code) that the only way for the RA 7641 retirement benefit to be tax exempt is for the Company to first set up and apply for a tax qualified retirement plan in accordance with RA 4917 (as implemented by BIR Revenue Regulations (RR) No. 1-68 and RR No. 1-83).

      Thus, in the absence of a formal retirement plan, you will be entitled to the RA 7641 retirement benefit BUT it will be taxable. It should be pointed out that the sole difference between no-plan and with-plan is being able to enjoy BIR’s allowed tax exemptions.

  77. Hello. My father work for a private company for more than 25years, but he is only 47years old right now. And wanted to quit his job. Can he not recieve anything from that company?

    1. If that Company has no retirement plan or policy in place, then no, the Company has no obligation to provide any retirement/separation benefits to anyone who voluntarily leaves before Age 60.

  78. How did you get the 5 days service incentive leave if the employee have used all his sick leaves and vacation leaves every year?

    1. The law specifies that it’s the Cash Equivalent of 5 days of service incentive leave (ie guaranteed), not the commutation of unused leave credits (ie dependent on having unused leave credits). Meaning, the RA 7641 benefits includes ALL of the listed components (15 days; cash equivalent of 5 days of service incentive leave; 1/12 of the 13th month pay), regardless of an employee’s unused leave credits.

  79. Hello po. May I ask if the COLA (cost of living allowance) is included in the computation of retirement benefit? Example: If the employee’s basic salary is Ps. 700/day and his COLA is 700/day also, how will you compute his 15 days salary retirement benefit? Thank you.

  80. Hi! I was hired as a project based staff at the start of my employment in 2007 and is continuously working in the same company up to the present. I was regularized after 3 years (in 2010). Can you please help me determine, when should the counting of years of service should start for the computation of retirement benefit? Should it be upon hiring (regardless of status of employment) or upon regularization only? I just got 60 years old this Feb. 2019 and planning to retire within this year. Thank you very much!

    1. If the Company has a retirement plan then the Plan benefit’s years of credited service will depend on the plan rules and regulations; if no plan, since RA 7641 applies to “all employees in the private sector, regardless of their position, designation or status and irrespective of the method by which their wages are paid” – then the project years will be counted. Note that if there is a retirement plan already in effect, the benefit at normal retirement age 60 will be the higher of the Plan benefit vs RA 7641 benefit.

  81. My company is planning to make an early retirement scheme to be added in CBA for those who have rendered 10 years and above, My question is can the benefits be lower than the law for early retirement? My company is planning to make it 50% lower if you have rendered at least 10 years. thanks!

    1. Yes, can be less than the RA 7641 benefit because there is no law providing a minimum Early Retirement benefit prior to Age 60.

      1. Retirement plans allowing employers to retire employees who have not yet reached the compulsory retirement age of 65 years are not per se repugnant to the constitutional guaranty of security of tenure. By its express language, the Labor Code permits employers and employees to fix the applicable retirement age at 60 years or below, provided that the employees’ retirement benefits under any CBA and other agreements shall not be less than those provided by law.
        Case of: Amelia R. Obusan vs. Philippine National Bank, G.R. No. 181178, July 26, 2010.

  82. Hi. What will be the multiplier if SIL willbe excluded since we provide more than 5 days of VL and Sl and was used year on year. Will it still be 22.5 X number of years in service? Thank you.

  83. Hello. I would like to ask lang po I’m currently working in private school. Kinuha po nila kami ng retirement plan sa sa isang retirement company. Aang question ko po ay kinakaltasan po kasi kami sa salary namin ng 3% sa monthly salary namin at yun daw ay makukuha namin kapag nagretire na kami plus 7% contribution ni company. Required po ba talaga na may share kami retirement plan namin? At pano po kapag nagresign namin possible ba na makuha namin ung binayad namin sa retirement? At wala din po kami nafill upan na kahit anong documents na kung sino magiging beneficiary namin at wala man lang notice samin na kakaltasan na kami the following month. Legal po ba yun? Thank you.

    1. 1.) A few retirement plans are contributory, yes – meaning employees mandatorily contribute a % of their salary. However, this mandatory employee contribution MUST be stated in the plan rules and regulations, and normally requires the signing of the required authorizations to deduct from the salary.

      Remark: Most retirement plans are non-contributory, where employee contributions, if any, are voluntary — and the employee is required to sign the required forms to effect this. Suggest checking with your HR re: the plan provisions, e.g. is the retirement plan with PERAA or CEAP? HR should also have a reference document stating the 3% employee contribution.

      2.) If the retirement plan provides death & disability benefits, then the plan rules will define the process re: nomination of beneficiaries; on the other hand, if the plan has zero death or disability benefits, then beneficiaries are N/A.

      3.) 100% of the Employee share (employee contributions + credited earnings) is always immediately payable whenever the employee leaves the company for any reason, subject to any applicable tax.

      4.) Employee contributions to the company’s retirement plan are not required by law. In fact, if both Employer + Employee contribute to the retirement plan, the benefit payable from the Employer’s share cannot be less than the RA 7641 benefit — meaning the company will still be legally required to pay any deficiency.

  84. Hi, my boss has worked with the company for 5 years and is turning 60 years old this November. He is planning to retire this June. Is he entitled to a retirement pay? Is it tax-exempt? Thank you.

    1. Assuming the company has no plan – if he retires before his 60th birthday, then No, not yet entitled to the RA 7641 retirement benefit.

  85. My mother is retiring soon, she’s been working for the same company for 35 years, will she get that 22.5 X 35 when she retires? and then start getting retirement from sss/gsis?

    That’s a separate payment, correct?

    1. Yes, the RA 7641 benefit (or any retirement benefit under the Company’s retirement plan, if any) is always separate from the SSS benefit.

      Her benefit entitlement will depend on her age at retirement, given that RA 7641 requires attainment of age 60 and service of at least 5 years with the company.

  86. Hello,

    I have a question with regards to the early termination of the retirement fund. What could be the proper treatment of the withdrawn fund ? Is there any possible tax exposure ?

    1. Please refer to your company’s Retirement Plan Rules and Regulations – there will be an explicit provision re: termination of the retirement fund, including the distribution of the fund’s assets. The tax exposure will depend on the type of benefits paid.

  87. hi my father is already 60 years old and have completed the service for 40years of his company .. how long the company to released his retirement pay according to law ?

    1. Unfortunately no time frame specified in the law but non-payment of the RA 7641 retirement benefit will be a violation of the Labor Code.

  88. An employee in our company died at the age of 62. He was working with us for almost 15 years. Are the heirs entitled for retirement benefits? We have no formal retirement plan. Thank you

    1. No, death benefits from employers are not mandated by law.

      Note: If the company decides to pay the employee’s heirs a death benefit, it would be tax exempt provided the proper paperwork is filed in accordance with BIR’s Revenue Memorandum Orders No. 26-2011 and No. 36-2011.

  89. Hi! Can an employee retire from the same company twice?

    Here’s the scenario:
    1. Company’s previous retirement policy was at 50 years with at least 10 years of service; with an optional retirement after 10 years of service (no prescribed age)
    2. Employee was granted optional retirement after 10 years of service based on the original retirement policy.
    3. Employee was rehired the day after the effective date of retirement, doing the same role as before. Employee signed a new employment contract with the company upon rehire and has since been transferred to other departments.
    4. The Company revised it’s retirement policy in 2012 to 60 years old with at least 15 years of service; with optional retirement after 15 years of service (no prescribed age).
    5. The employee has now reached 15 years of service from the rehire date and is requesting for optional retirement.

    Should the company grant the second retirement request?

    Thank you very much for your insight.

    1. Yes – there is no limit on the number of times an employee can be rehired by then retire from a company. Even the Plan Rules and Regulations already includes a re-employment provision that those rehired will be readmitted to the Plan as a New Member.

  90. In the Law, how many times, an employee will retire in a same company? Is retire and rehire legal? The employee is retire 25 years in service and rehire the following day, but the salary was reduced to 50%, and will retire again after 10 years. Is this legal?

    1. Depends – was the first retirement with 25 years with the mutual consent of the employer and employee? If there are disputes then you should refer this to a labor lawyer or DOLE.

      1. To clarify: Contract/project can be excluded from a formal retirement plan’s coverage; however, they are entitled to the RA 7641 provided they meet the age & service requirements.

  91. hello are household helpers qualified for a retirement benefit who reached age 60 and 5 yrs with a family/employer?

      1. To clarify: Previously they were exempted, however in recent years the DOLE handbook has now included domestics (kasambahay) as also covered by RA 7641.

  92. I’m 60 yrs old and I submit to the Company for retirement just want to know if I can ask the Company a retirement benefits ? I work for 4 year and 5 months can I get some tokens for my length of service? Awaiting your reply thanks

    1. You can try to ask but under the law you have to be at least 60 years old with at least 5 years of service to get the retirement benefit.

  93. Hi,

    I got separated from my company due to restructuring.Initial computation of separation pay states:
    1. Salary x years of service (tax free)
    2. 14th month (with tax)
    3. Vacation Leaves (with tax)
    4. Incentives/Bonus (with tax)

    Is it correct to tax my benefits (#2,3,4)?

    I also received a monthly allowance. Is it correct to include the monthly allowance in the computation of my separation pay (e.g. Salary + Monthly Allowance x years of service)?

    By the way, I’m 51 and 15 years with the company.

    Thanks.

    1. This is more of involuntary separation that is covered by the labor code and not the retirement pay law. I believe this is outside of our scope and would rather you speak to a labor lawyer or consultant about this.

  94. if the retiring employee/officer is already 71 years old and 8 years in service, is she entitled to receive an amount equal to 100%?

    1. if she is a regular employee and the company does not have a retirement plan, then she will be eligible under RA 7641 and the benefit will be 22.5 days pay per year of service.

    1. Retirement benefits prior to Age 60 are not mandated by law; so Company decides whether or not to provide early retirement benefits to its employees.

  95. Hello, just came accross this helpful article. Can a government institution deny a person of his/her retirement benefits or the right to retire even if the person have rendered good years of service but was involved in an administration case at the end of his/her career years? Thank you very much in advance for any advice. All the best!

    1. This is outside our purview, i.e. RA 7641 does NOT apply to “employees of the National Government, including Government-owned and/or controlled corporations” – instead, your question would likely depend on the Civil Service Law and its regulations.

  96. Hello, i joined in the company february 01, 1996…
    I’m became 60 years old last july 03,2019..supposedly i retire july 03,, with a lenght of service of 23 years but the company ask me to extend until september 2019…my question is: does my length of service now become 24 years, due to the prenciple that…”a fraction of 6 months becomes one whole year?

    1. For the RA 7641 benefit – Yes. If your company has a formal retirement plan, you need to check the Plan Rules re: how fractions of a year are counted.

  97. I am 59 years and 8 months in December and 10 years with the company. I am planning to retire this December because I will migrate to the US. Am I still eligible to retire under RA 7641? Will I be receiving the I/2 month for every year of service.

  98. Hi I am now 43 years old.
    I started to work in our company when I am 19 years old. Thus, currently working here for more than 23 years now. Is it possible for me to retire after I reached the 30 years of service? Even if I am just 50 years old by that time?

    1. You can retire, Yes – question is if you will be eligible for any retirement/separation benefits. Under RA 7641 – No benefit yet. If your company has a retirement plan, depends if it provides anything prior to Age 60.

  99. How long can we get the retirement pay of the company? My father is now at 60 years old last August 6. Does it really takes 6 months to wait like what the company told to my father?
    He works for 26 years in just one company.

    Looking forward for your response! Thank you

    1. No, it doesn’t – formal retirement plans explicitly state paying out in 60 to 90 days. Check if the company will pay interest if they keep delaying payout of the retirement benefit.

  100. an employee is entitled for retirement pay even a company doesn’t have cba? however a company have retirement sss benefits. Did an employee entitled for both retirement pay and retirement benefits ?

    1. Yes – RA 7641 applies even if the company doesn’t have a CBA or formal plan.

      And Yes – the RA 7641 benefit (payable by the employer) is separate and distinct from the SSS benefits (payable by the government).

  101. Hi im 61 yrs old and has been with a private company as accountant for 9 yrs of uninterrupted / continued service which i find it my qualification to avail my retirement. I am however on a contract basis renewable every year but i am paid regularly on a monthly basis. I am already planning to retire. Can i invoke R.A. 7641 to avail a retirement benefits / pay. Thank you for any advise on this matter.

    1. Yes – because per Rule II of the Rules Implementing the Labor Code implementing RA 7641:
      1. RA 7641 “shall apply to all employees in the private sector, regardless of their position, designation or status.”
      2. Under RA 7641, the term “salary” is irrespective of the method by which wages are paid (whether such payments are “fixed or ascertained on a time, task, piece or commission basis, or other method of calculating the same”).
      3. RA 7641 also covers Employees Who Are Paid by Results, i.e. workers paid by results, including those paid on a piece rate or task basis.

      1. ATM thank you so much for your reply. I think i am now ready and have basis to file for my retirement in the company. God Bless.

  102. Hi! I am judy florendo, i’m 60 yrs old now, and working in my company for 19yrs now as a projec base employee. My company regularly deduct sss pag ibig and philhealth in my salary. Im i entitled to RA 7641? Tnx.

    1. Yes – because per Rule II of the Rules Implementing the Labor Code implementing RA 7641:
      1. RA 7641 “shall apply to all employees in the private sector, regardless of their position, designation or status.”
      2. Under RA 7641, the term “salary” is irrespective of the method by which wages are paid (whether such payments are “fixed or ascertained on a time, task, piece or commission basis, or other method of calculating the same”).
      3. RA 7641 also covers Employees Who Are Paid by Results, i.e. workers paid by results, including those paid on a piece rate or task basis.

  103. Hello, Iam a GOCC employee retiring on October 30, 2019 at age 65. Our company is covered by the SSS and has no existing retirement plan. May I know what minimum retirement benefit which our company is mandated to pay to their eligible retiring employees.

    1. GOCC Employees are outside the coverage of RA 7641, so your mandated retirement pay will presumably depend on the Civil Service Law and its regulations.

  104. Hello,
    Im, Rose I am working in the private company for almost 26 years,I am 45 yrs. I am planning for early retirement. Can I already avail?
    Thank you, and Im looking forward to your reply.

    Rose

    1. Availment depends on whether or not the company actually provides early retirement benefits prior to age 60.
      => If the company has a retirement plan, please check the plan’s required age/service eligibility for early retirement, if any.
      => If the company has no plan, then zero benefit entitlement under RA 7641.

  105. Hi, im consulting regarding the issue of my grandmother, she had worked as a cook for almost 50 years and she did not resign she was told that she could go home and retire but she did not recieve any last pay or retirement or even separation pay what should we do she is now ,83 yrs old.she just retired last month.

    1. Did she work as a cook “kasambahay” in the personal service of another? => If Yes then per the 2019 Department of Labor and employment (DOLE) Handbook (Chapter 15.H) she is entitled to the retirement benefit under Republic Act No. 7641.

  106. i am a government employee. if i will retire on November, will my salary for the month of October be withheld by the department? if so, in what provision of the law will be the basis. Thank you.

    1. RA 7641 does not apply to Government employees – instead, government employees are covered by the Civil Service Law and its regulations, which are outside our scope.

  107. i am a seafarer for 19 years in pullmantur company under the umbrella of royal caribbean here in the philippines am i entitled for a separation pay or early retirement pay at age 55 in case i wanted not to go on board anymore?

    1. Entitlement depends on whether or not the company actually provides early retirement benefits prior to age 60.
      => If the company has a retirement plan, please check the plan’s required age/service eligibility for early retirement, if any.
      => If the company has no plan, then zero benefit entitlement under RA 7641.

      1. In Royal Caribbean cruise lines if someone resigns he is entitled for a separation pay if i do the same am i entitled too

  108. Hi, will the 22.5 days/mo still apply even if the company is giving SL/VL to its employees? Do we have to interpret RA 7641 in relation to Labor Code Art. 95(b)?

    Similarly, will the 1/12 13th mo pay be included in the mandatory retirement pay even if the employer is releasing this every year to its employees before retirement takes place?

    1. Yes, the retirement benefit equivalent to “22.5 days of the latest salary per year of credited service” applies REGARDLESS of the company’s actual SL/VL policy, and regardless of when the 13th month pay is paid.

  109. My uncle is working for a private firm and he will be turning 64 by January 2020. The company has a retirement policy, that employee will enjoy retirement benefit when they retire by age 65. Is this in compliance with the RA being discussed? Does this mean that he writes to the company that he would like to retire by Feb 2020, he will not get any retirement benefit as per RA?

    1. Per Rule II implementing RA 7641: The benefits under any collective bargaining and other agreements shall not be less than those provided under RA 7641. Since that company policy provides Zero benefit for Age 60 with 5 years, the RA 7641 rule should prevail.

      => Thus, assuming he has at least 5 years of service, he is already entitled to the RA 7641 retirement benefit.

      1. Just to further clarify:
        “Art. 287. Retirement. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.
        In this case the company retirement policy is established at 65 and employee who retires at 65 will enjoy the retirement benefit.
        Now, should the company provide a retirement benefit if employee retires between 60 and 64 (with 5 years of service)

  110. Hello,
    I am 60 yrs old this year still employed with my present employer since 2001, that’s 18 yrs. What benefit can I avail if I don’t retire or resign, not sure if the company’s retirement plan is BIR registered, is my salary still subject to withholding tax under TRAIN law? please clarify.
    Thank you.

  111. I’m already 60 years old last Sept.15 2019 … I’m planning to retire early next year is my SL/VL BENEFITS OF 30 DAYS PER YEAR how does it applies or computed as part of second component ( SIL )

  112. Hi Po!
    Ask lang po, ano po ang latest age na retirement para po sa isang nagtrabaho sa private na company. Security Guard po ako.
    Maari ko din po ba malaman kong ano ang mga binipisyo na maari ko pong makuha mag 20 yrs. na po ako sa agency ko..
    Salamat po.

    1. Under RA 7641 the retirement benefit upon reaching the age of 60 with at least 5 years of service is 22.5 days pay per year of service.

  113. If company is financially loss n was forced closure during to huge audit variance. Am I still obligated to give 13th month ? Any article or law to support it?

  114. Dear sir.
    We were offered an early retirement plan. Im 48 a d been with the service for 14.7 years. We were offered gross mothly pay (GMP) x 1.5 x length of service with applicable tax. We have an ivestment program (IP) where an employee can contribute and earn interst plus other additional benefit wc u get once u retire. The benefit that comes with IP is GMP X 50% X # of service. Now, the company mentioned to us that we are not entitled to the said benefit because it is only applicable to normal retirement(not specified in the IP provision) in contrary to us that we were offered the eary retirement program (ERP). Is the company correct?

    Pls shed light.

    Thank you.

    Sherry

    1. Please share the retirement plan document of your company for us to give our opinion. Also this plan should be approved by management.

  115. Can we force an employee to retire at 65? An employee has manifested his desire for continued employment without imposing on social benefit obligations that are soecific to age up to 65.

  116. Hello. We have a family driver who has worked for us for 50 years now. He is now 68 years old. By law, is it required that he should be given a retirement package stated under RA7641? Thanks.

  117. How much I receive,I Am retiring but they did not pay yet.My daily salary is p382.11 for 16 years now,employed in private school as electrician. Waiting. Thank you very much.

    1. HR should facilitate the processing and payment of your retirement benefit based on the minimum benefit under the law or retirement plan, if any.

  118. My mother is about to retire, but has taken an unpaid leave beforehand, due to health reasons. Somebody from DOLE said she can’t get her retirement pay because the law requires 5 CONSECUTIVE years of service. By the way, she was part of the group that founded the company 20 years ago, and she has worked there since then. She is now 59. Is it true that 5 consecutive years in service is required?

    1. From our understanding of the retirement pay law (RA 7641), the only requirement to be eligible is to be at least 60 years old with at least 5 years of service. The definition of service includes authorized absences vacations and regular holidays. We believe that your mother should be eligible for a retirement benefit.

  119. Hi! I just read this article now and I need some clarifications on the requirement to accrue the retirement benefits of an entity’s employees. Based on the RA, service establishments/operations employing not more than 10 employees are exempted from the coverage of the RA. My client is a service company with 51 employees–nine of whom are regular employees who rendered service for the company for more than 5 yrs, all others are either part-time employees or regular employees who rendered service for the company for less than 5 yrs. They do not have a formal retirement plan. We had confusion on the interpretation of the RA. Is it correct that they are not required to accrue the retirement benefits because they only have “9 regular employees with more than 5 yrs of service”? Thank you.

  120. Hi Good Day, Just want to ask if the retirement pay provided to my grandmother was correct. She’s working in a Hotel Inn for more than 39 years with current total employee of 12. My grandmother is already 67 years old since her employer doesn’t allow her to retire by age of 60 till 67 since “wala pa daw kapalit”. now she currently ended her service and company gave her 100,500.00 as her retirement pay. Is it accurate based on the given situation. By the way the company does not have retirement plan.

  121. Hi! My father is working in a company for almost 35 years, and he is about to turn 60 this April. however, the situation seems unfair to him. he was wrongly accused of stealing something without any pieces of evidence. he was told to have a 1-week vacation leave, for the meantime while they were investigating the incident. after a week, he returned to the office to report and was extended another day for leave. after that, he got back to the office he was given right away a check as payment for voluntary resignation even though he was not able to render a resignation letter.and without any notice , proper administrative hearing nor formal results of the investigation done received.

    sadly, he received that small amount.

    is he still entitled to a retirement benefit?

  122. My boss who is also the President & Gen. Manager of our company(private) will soon be 65 years old this coming March 22, 2020.
    And he will apply for SSS retirement benefit right after his birthday.
    In this case, can he still continue to work in his company as a regular employee eventhough eventually he will be a pensioner? with the regular withholding tax of a regular employee?
    Will he be deducted the monthly Philheath contributions?
    Will he be paid of retirement(for 15 years) in the absence of a retirement plan? Tax free?
    What will be the treatment of his employment after retirement?

    Looking forward to your immediate reply on this.

    Thanks so much.

  123. Hi po!

    Nagapply po ako ng BPI Voluntary Contribution para sa retirement. I would like to ask, what if nag-resign ako sa company. Paano ko makukuha ang contribution kahit di pa ko 60 years old. pagpaliban na natin na 30 years old ako before, and 5 years na ako sa company at regular ako ng 5 years.
    Tanong ko lang if paano ko makukuha ang benefits at contributon ko po?
    Maraming Salamat.

  124. I already applied to BPI Voluntary Contribution. I have question, what if i resigned at the age of 30 years old and 5 years of services. How could i get my benefits and contribution. I hope to hear your feedback. Thank you

  125. Good afternoon, I would like to clarify if the SSS Retirement Plan can be considered as retirement trust fund by the company?

  126. I am 62 yrs. Old and presently 9 yrs on my company, and what percent can the company can give, thanks muchs waiting for your relpy.

    1. Assuming the company does not have a formal retirement plan, you are eligible to receive the minimum retirement benefit under RA 7641. Under the law you are eligible to receive 22.5 days pay per year of service.

  127. What if the employee will be retiring this year but suddenly he died. Does His wife can claim the retirement from his employeer

    1. Per RA7641, if that employee reached age 60 and at least 5 years of service with the company first before death, then the spouse may claim retirement. Otherwise, there will be no benefit unless there is a more generous company policy.

  128. Is it mandatory for the private company to pay optional retirement to their employees when they reach 10 years in service?

    1. It is not mandatory to pay option retirement to employees with at least 10 years in service. The age and tenure requirement per RA7641 is attainment of at least age 60 with at least 5 years of service.

  129. We had employee here and he is retiring at the age of 65 years old but he is requesting to extended his employment for 8 months can we allowed it? Are we not having trouble if we will grant his request?

  130. I retired at age 60 & worked for more than 7 years in same company. Is my retirement pay non taxable? Thanks. God bless

    1. Yes, your benefit is tax exempt. As of January 1, 1998, retirement benefits paid in compliance with RA 7641 were made exempt from income tax under Section 32 (B)(6)(a) of the Tax Code of 1997 and Revenue Regulation 2-98. Prior to 1998, only retirement benefits coming out from BIR registered tax-qualified plans were tax-exempt.

      1. Many thanks po for your speedy reply. This is surely a big help. More power to you and your laudable public service. God bless po.

  131. I retired at age 60 & worked for more than 7 years in same company. Is my retirement pay non taxable? Thanks. God bless

    1. Yes, your benefit is tax exempt. As of January 1, 1998, retirement benefits paid in compliance with RA 7641 were made exempt from income tax under Section 32 (B)(6)(a) of the Tax Code of 1997 and Revenue Regulation 2-98. Prior to 1998, only retirement benefits coming out from BIR registered tax-qualified plans were tax-exempt.

      1. Many thanks po for your speedy reply. This is surely a big help. More power to you and your laudable public service. God bless po.

  132. Good pm po ask kolang pag po sa seaman at nk 13 or 15 years nktgal po siya sa company nag pa alam nga po sa tagal ng skayan mkukuha bukod po SSS kse po sa Amosup meron po hulog sila na 20 dalar everymonth pag on board wala po sila pasbook benifits daw po hospitalization lang dito po kmi sa rizal at hinde nman po nggmit 51 npo asawa ko may pendion po kya siya mkuha sa opis at Amozup gusto kolang po mlman salamat po

  133. Good pm po ask kolang pag po sa seaman at nk 13 or 15 years nktgal po siya sa company nag pa alam nga po sa tagal ng skayan mkukuha bukod po SSS kse po sa Amosup meron po hulog sila na 20 dalar everymonth pag on board wala po sila pasbook benifits daw po hospitalization lang dito po kmi sa rizal at hinde nman po nggmit 51 npo asawa ko may pendion po kya siya mkuha sa opis at Amozup gusto kolang po mlman salamat po

  134. I was employed for 7 years 9 months in same company & was retired when I reached 60 years old. The retirement benefit under company plan ( 1 month pay for every year of service x 8)- was taxed 30%. However, under RA 7641 , my minimum retirement should be (22.5 days pay for every year of service x 8 ) non taxable. Since the company’s plan was taxable, I received much less compared with what is the minimum due under RA 7641. Should the retirement benefit plan given by company be voided in favor of RA 7641 & must be tax exempt? Hoping for your kind advice.Many thanks. God bless.

  135. I was employed for 7 years 9 months in same company & was retired when I reached 60 years old. The retirement benefit under company plan ( 1 month pay for every year of service x 8)- was taxed 30%. However, under RA 7641 , my minimum retirement should be (22.5 days pay for every year of service x 8 ) non taxable. Since the company’s plan was taxable, I received much less compared with what is the minimum due under RA 7641. Should the retirement benefit plan given by company be voided in favor of RA 7641 & must be tax exempt? Hoping for your kind advice.Many thanks. God bless.

  136. My father is retired by the age of 67 years old and 23 years of service. I wonder why the company is only pay him 186k pesos. Which he expected to pay him of about 370k pesos. Pls i need an advice

    1. Please note that the computation of the benefit is based on basic final daily pay multiplied by 22.5 times the years of service.

  137. Hi! This is very helpful.My questions are:
    1. What is the base amount of salary? Latest amount on retirement date or the annual salary since first year of employment?

    2. Any exemption on taxability if you are 60 years old but less than 10 years with the company?

    3. What if the employee dies before reaching 60 but more than 5 years with the company, does he get this retirement benefit?

  138. Good afternoon..1 just want to ask some question about the retirement pay of an employee..my husband was employed in a school manage by a church for 20 yrs and he was retiring at the age of 49.is he eligible for retirement pay? Thank you very much for immediate response..

    1. need to check if the school has a retirement plan. if so, then please read through when an employee is eligible to receive a benefit.

      assuming the school doesn’t have a retirement plan or policy, then he is not eligible for a benefit under RA 7641.

  139. I am already 61 yrs old, and has been w/ this company for 22 yrs and did not get any retirement benefit yet. The company will not let me go yet, but I want to receive my retirement benefit already. What should i do?

    1. does your company have a retirement plan? if so, please see the provisions for eligibility. if no plan, then you can speak to management and invoke the optional retirement under RA 7641.

  140. Hi! My retired uncle joined a new company at the age of 62 and has served the company for 9 1/2 years. He died at the time of his employment where is already 71y.o. Is he entitled to retirement pay under the law? If yes, how many years will be computed as the basis of his retirement pay. Thanks.

  141. My Father got stroked 12 yrs ago at the age of 60 and was unable to report in his private construction company since then. Unfortunately, the company did not initiate to provide his retirement pay. He’s a regular employee during that time and served for 25 years.

    Can he still claim to his company the retirement pay he has to receive at that time?

    Another thing, he was advised to sent a formal voluntarily resignation letter one year aftr the incident happened. Is this just okay?

    Would be really appreciate to get an advice from you in regards to this concern.

    Thank you.

  142. good day mam, sir ako po ay nagwork s private company s hwa ryoung corporation 6yrs n po ako nagwork s company ngaun june 28, 2020 ako ay 60 yrs old n magretire n po. tnong ko po kung maavaile po ako ng retirement pay s company. sbi po ng hr nmin wla daw po ako makukuha ng retirement pay. mam, sir sna po matugunan u po ang tnong ko s inyo marami pong slamt.

  143. Good day,
    May I ask if family drivers are entitled to retirement benefits? If yes, how do I compute the amount and how soon should I release it? Thanks!

  144. Sir I would like to ask these questions for enlightenment:
    1. does a 60 yr old employee with 3 yrs in service can claim retirement benefit mandated by law? (referring to RA 7641)
    2. if we are going to follow the minimum retirement benefit without considering any retirement plan, where can we find the Tax Table for this?
    3. What are the requirements/law (if there are any) as to where we can get the funds for the retirement benefit considering what is mandated by law as per RA 7641?

    Please send your reply to my email. euroselamosteapellido@yahoo.com

    Thanks
    eurose

  145. Hi, when do we start counting the 5 years of service, Is it from DATE OF HIRING or from THE DATE OF PERMANENCY. Thank you

  146. I’m 61 yrs old now, how can I claim my retirement pay. I work in the company for 28 years. What is the process? Shall I just wait for the company to give it to me or shall I apply for a claim? Thank you.

    1. Speak to your HR and mention about your intention of retiring from the company. If the company does not have a retirement plan then you can mention about the retirement law under RA 7641.

  147. Considering that the Supreme Court held that family drivers are governed by the Civil Code and not by the Labor Code, is it safe to say that family drivers are not entitled to retirement pay?

    1. Yes you are right, family drivers and not covered by the Retirement Pay Law (RA 7641). Upon reviewing the Labor Code, there’s also no mention of retirement benefits in the section under househelpers.

  148. I AM ALREADY RETIRED BY THE COMPANY BUT STILL I AM WORKING WITH THEM. IS THE SALARY OR COMPENSATION GIVEN TO ME STILL SUBJECT TO INCOME TAX?

    1. 1. does a 60 yr old employee with 3 yrs in service can claim retirement benefit mandated by law? (referring to RA 7641) – Under the law, the employee is not yet eligible since he has not meant the 5 years of service requirement.

      2. if we are going to follow the minimum retirement benefit without considering any retirement plan, where can we find the Tax Table for this? – the employee’s tax rate will follow the individual’s tax bracket, similar to the tax rate table you use for computing for his/her net pay.

      3. What are the requirements/law (if there are any) as to where we can get the funds for the retirement benefit considering what is mandated by law as per RA 7641? – need to set up a retirement plan, appoint a trustee and register with the BIR. Kindly email us your employee head count at info@zalamea.ph so we can provide you with a proposal laying out the next steps to set up your retirement plan.

    2. Hi Romeo! Yes, your consultancy fee is still subject to tax of either 5% or 10%.
      Based under RR No. 11-2018, professional, talent, and commission fees payable to individual payees shall be subject to 5% withholding tax if gross income for the current year does not exceed P3M, or 10% withholding tax if gross income for the current year exceeds P3M.

      In addition, pursuant to RR No. 14-2018, the higher 10% withholding tax shall also apply in case of professional, talent and commission fees payable to VAT registered individual payees, regardless of the amount of payee’s gross income for the current year. Thus, to be subject to a lower withholding tax rate of 5%, the following conditions must apply:

      1. the amount of gross income of the individual payee for the current year should not exceed P3M ; and,
      2. Your BIR Certificate of Registration (COR) should indicate that you’re a non-VAT taxpayer (new
      condition).

  149. I started with the company since 30 January 2012 now last 30 Jan 2020 I have rendered 8 years of service with the same company am now 62. They told me I am only eligible for 5 years as what the law says (at least 5 years..RA 7641)but I know HR is ignorant or misleading/cheating me since I am sure it is eight (8) years of service. Say I earn 30,000 a month in 26 working days a month. What would be my computation and is it taxable if so what is the rate? Thank you.

    1. Hi! If the Company has no existing Retirement Plan, the company can only subscribe to the minimum regulatory benefit stated in RA 7641 also known as Retirement Pay Law. The said Law says that all retiring employees, upon reaching the age of 60 (up to age 65) and has rendered at least 5 years of service, are entitled to a retirement benefit equal to 22.5 days Pay per year of service.

      For the computation of benefit: latest daily salary (upon retirement retirement) * 22.5 days * number of years of service.

      The benefit is subject to tax based on TRAIN.

  150. Hi! I’d like to know if the private company/employer still needs to pay retiment benefits despite the employee being able to claim SSS retirement pension? Since the private company has been diligently paying the SSS.

  151. Hi good aftenoon,just wanna my father is 66 years old and hes been working with the private company for 10 years now is he entitled with this RA 7461??

    1. Hi! He may ask the HR if there’s an existing Retirement Plan of the Company. The retirement benefit computation would be based on the Retirement Plan. If none, the company can only subscribe to the minimum regulatory benefit stated in RA 7641 also known as Retirement Pay Law. The said Law says that all retiring employees, upon reaching the age of 60 (up to age 65) and has rendered at least 5 years of service, are entitled to a retirement benefit equal to 22.5 days Pay per year of service.

  152. I am a doctor, age 80, retired this month.One employee, a secretary, age 60. 38 years employed. Am I obligated to give her a retirement pay since I am in service(profession), and have less than ten employees?

  153. Upon retirement when I suppose to receive my retiment pay?
    I retire this July 16,2020 at age of 63;years of service 12years.

  154. I’m 50 years old,I’m working at a restaurant that doesn’t operate this time because of the pandemic.They are offering us a resignation option but I’ve been in the company for 29 years. I’m considering the thought of an early retirement,what are the rules regarding early retirement in our current situation?

    1. Hi! You may ask your HR if the company’s retirement plan has an Early Retirement provision. If there is, check if you’re eligible based on the Early Retirement date stated under the retirement plan.

  155. Hello, Iam mattie 60 years old last january 26, 2020, as of today my retirement pay is pending due to tax exemption of the retirement fund our company file the tax exemption 2years ago but up to this date wala pa. How can i get my retirement with out tax its possible? Pls. Help me. Thanks

    1. Hi! We have to know first the eligibility and retirement benefit formula stated under the Retirement Plan.

      If the Company has no existing Retirement Plan, the company can only subscribe to the minimum regulatory benefit stated in RA 7641 also known as Retirement Pay Law. The said Law says that all retiring employees, upon reaching the age of 60 (up to age 65) and has rendered at least 5 years of service, are entitled to a retirement benefit equal to 22.5 days Pay per year of service.

      For the computation of benefit: latest daily salary (upon retirement) * 22.5 days * number of years of service.

      1. I’m now on my 5th month on floating status as call center agent iand can do wfh only due to health risks as per quarantine protocol also,62yo senior citizen.I have med cert to jystify this. Please advice me on this:
        Should the company be the one to terminate me due to redundancy and disease?
        Do I have to complete the 6 months?
        Do I go to DOLE now?
        For sure my company will not terminate me to avoid the Separation pay.Or it will offer deployment to another account.
        Can i turn it down even if it is work from home?
        I’ve waited long enough and feeling the discrimination.I had enough of the inconsistent updates my Superior is providing me.
        Please help me.
        Thanks

  156. sir/ma’am, paano po kung inilipat ka ng company na sila din po ang may ari? ganun din po ba ang separation pay?

  157. sir/ma’am, paano po kung inilipat ka ng ibang company na sila din ang may ari,paano po ang seperation pay nun? parehas po ba ng retirement pay?

    1. Hi! You may inquire from your HR if the Company has an established retirement plan and if it has portability provision. The retirement benefit computation would be based on the Retirement Plan. If none, the company can only subscribe to the minimum regulatory benefit stated in RA 7641 also known as Retirement Pay Law. The said Law says that all retiring employees, upon reaching the age of 60 (up to age 65) and has rendered at least 5 years of service, are entitled to a retirement benefit equal to 22.5 days Pay per year of service.

  158. I am a doctor who recently retired at age 79. I have 2 employees. My secretary and a driver who also serves as a domestic employee since he lives with me and has free board and lodging. My secretary has now reached age 60, working for me for 35 years, Can she apply for SSS pension? Do I have to pay her 1/2 month for every year of service since i have only 2 employees?

  159. what if the retiree is not at retriable age and subject to withholding tax. what bir form would be use to file the withholding tax?

  160. Im 42 years of age now, 12 years in company as technician may i know if im eligible to early retirement? Thanks in advance

  161. Good pm, sir i rendered 26 yrs in the company then i am 51yrs old,can i avail early retirement? If their is no retirement plan in the company?

    1. Hi! You may ask your HR if your company has an established Retirement Plan and check if it has Early Retirement Benefit provision. If none, the company can only subscribe to the minimum regulatory benefit stated in RA 7641 also known as Retirement Pay Law. The said Law says that all retiring employees, upon reaching the age of 60 (up to age 65) and has rendered at least 5 years of service, are entitled to a retirement benefit equal to 22.5 days Pay per year of service.

  162. Hi I’m the daughter of Mr. Jessie a employee of a private company. Our HRD said that he need to retire at age of 60. But otherwise they want to give only the half of the retirement pay. They said to my father the reason why they give only half of retirement because of the pandemic. May I ask if this is the right way to do that or not? He is 17 years of service.
    I really appreciate your reply. Thank you.

    1. Hi! The benefit computation depends on the cause of separation. If he was separated due to retrenchment, he may check with HR If the company has an established retirement plan and has involuntary separation benefit provision. Otherwise, under the labor code, the separation pay for retrenchment is equal to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

  163. Hello po!,. I am 55 yrs old and already had 22 yrs working with private company…in case i will tendering my retirement… Should my company obligue to give me V-S/Leave? We are more than 20 employees in the said company but never give us V-S/Leave since the beginnng up to now.

    1. Hi! Based on the labor code, the employer must provide 5 days of annual Service Incentive Leave to workers who have been with the company for at least a year.
      You may check your company policy on vacation leaves if it provides higher number of leave credits.

  164. We are knitting manufacuring company employing less than 10, are we exepmpted from 22.5 days computation for retirement pay?

  165. Hi! I am 55 years old and of service with my present company for 11 years, and I am eligible for early retirement as per our company retirement plan. My question is, 1) If the company approves my application, can I still apply for another job with another company? 2) Do I need to complete the whole fiscal year or any month of the year you wish to avail? Thank you and looking forward to any advice you may share.

  166. Good day. Wilson here, i just want to ask, If a person resigned at age 71 in a private school, are they entitled of a retirement benefit? They’ve been working 20 years or so. Appreciate your response.

  167. There are employees in our company who are over 25 years in service. The company has a retirement plan with bpi with a retirement age of 55 yrs old for tax free. In 1995 the tax free retirement age by law is 50 yrs old? The company did not update the retirement plan with bpi, the reason given by the company is for employee to be loyal? The company did not also advise the employee that the plan was not updated since 1995. Should the retirement plan with bpi updated by the company to age 50?

  168. Good day!
    Asking this scenario if my understanding of RA7641/RA4917 is correct? The employee is
    What if there is a retirement plan in place (with early retirement at 50 option) and the total funds available is lesser than if the benefit is computed via RA7641, is it correct that what will still be followed as computation will be from RA7641?
    Thanks in advance for the answers.
    Stay safe!

    1. Hi! As per R.A. 7641, the employee must be at least age 60 with at least 5 years of service to be eligible for the benefit provided under this law. Since the employee does not meet the requirements of R.A. 7641, his benefit will be according to what is provided under the retirement plan of the Company. In case the retirement fund is less than the benefit, then the Company should pay the difference.

      1. @Marielle
        Appreciate your reply and inputs!
        So to confirm and the bottomline will be that, even if a retirement plan is in place and active but the proceeds is less than the required, dictated or stipulated from RA 7641?
        Meaning, the employer should fill in the difference? To fulfill benefits of a retiring 50 years old with more than 10 years of service and qualified for early retirement option of the company plan?

  169. Hi! I am 55 years old and of service with my present company for 11 years, and I am eligible for early retirement as per our company retirement plan. My question is, 1) If the company approves my application, can I still apply for another job with another company? 2) Do I need to complete the whole fiscal year or any month of the year you wish to avail? Thank you and looking forward to any advice you may share.

  170. May i ask, in the retirement plan of the company what is provided is the benefits for those who reach the age of 60 and those who have served at least 20 years or the early retirement option. These are all tax free since the plan is approved by BIR. Whatever is higher between the provident plan and the result of the computation based on RA 7641, is the amount given to the retiree. May i ask, in RA 7641, 50 years old and 10 years of service is tax free if the plan is approved by BIR. since this is not stated in the company’s plan, this rule is not applied nor the computation under RA 7641 for this 10cyos/50 years old.Am i correct in my understanding that this 10/50 do not apply to our company’s computation of benefits nor tax free consideration.

    1. Hi Ignacia,

      As per R.A. 4917, the retirement benefits received by officials and employees shall be tax-exempt provided that the company’s plan is filed with the BIR and the retiring employee is at least 50 years old and has rendered at least 10 years of service with the company. In your case, since the retirement plan is already filed with the BIR, the first condition is satisfied. However, both conditions should be met in order to avail the tax-exemption. In this regard, if a retiring employee has been in the service of the company for 20 years but is not yet 50 years old at the time he retires, then his benefit will still be subjected to tax.

  171. Hello, Last year I filed an “Early Retirement” due to health issues at the age of 59…I’ve been with the company for 12 years…No consideration ?

    1. Hi Manuel,

      There is no provision for Early Retirement mentioned in law. In this regard, the company is not required to pay for employees retiring prior to reaching age 60 despite his/her tenure. In the same manner, if the company has a Retirement Plan which does not offer benefits for Early Retirement, an employee will not be entitled to any benefits from the Plan if he/she will retire with an age less than 60 or the normal retirement age mentioned in the Plan Rules.

  172. Hi, our company have CBA which indicate for a compulsary retire on employee reaching 20 years of service and be paid for every year of service. Does this CBA can be used by the employer as legal basis to retire the employee even the employee do not yet want to Retire. Also, if the employer opt to retrencht the employee instead of retiring him does the retrenchment payment lower than the payment indicated on the cba when he retire? Thanks in advance.

  173. Hi, Our company have a retirement plan and registered under BIR. Our employee retired at age 60 and paid of his retirement benefits. But the company rehired the said employee and continue working for the next 5 years or more, does RA 7641 is applicable to the said employee

    1. Hi Eddie,

      The said employee will still be entitled to retirement benefits under R.A. 7641 if he will retire not beyond age 65. However, his retirement benefits will be subject to tax. This is because one of the prerequisites for a tax-exempt benefit as per R.A. 4917 is not having previously availed of the privilege under a retirement benefit plan of the same employer or another.

      1. Thnx for the reply., we have the same case also. Though, the rehired employee’s status is on a contractual basis only,are we still obliged to pay her when she vreaches her 65th y/o.

  174. Happy new year!
    I am employed in a private firm – construction as a Project Manager with a Project Based status on my employment.
    I started on April 6, 2015 and I was then 64 yo. Up to now, I am still employed and will turn
    70 yo on April 9, 2021..
    Will I be entitled for a retirement plan under RA 7641?
    Thank you.

    Yours sincerely,

    Rolando N. Robles
    rolnrobles@yahoo.com
    +63 917 6399317

  175. Good morning! I’m 57 yrs old and looking forward that my company will offer retirement package due to this pandemic.
    1. Can they force me to accept it? By the way according to those who were offered before, they were told that if not accepted, the benefit will be lowered from 200% to 100%.
    2. There is a retirement plan at age 60. Many employees regard this as retirement age. Can the employer forced us to retire at 60 with this retirement plan?

    Hope to hear from you.

    Thanks.

    1. May i share po?the 2nd question is can the company force you to retire at age 60?since there is a retirement plan,most probably the age and/or year of service are stipulated there,hence,you will retire as designed by the company at retireable age. if the plan is approved by BIR your benefits will be tax free. The retirement somehow allows us to relax and enjoy the fruits of our labor.

  176. Hi. My father worked for a private company for 30 years already and reached the age of 60 last Aug. 2o2o. The company offered him to retired by that time but he refused and asked to still give him 2 more years to work. His company also agreed on it. Unfortunately, my father died on Dec2020. Are we still entitled on his retirement pay?

    1. Hi Maricel. Does the company have an established retirement plan which offers death and disability benefits? If so, yes, you may still be entitled to the benefits provided by the plan. Otherwise, you will not be able to receive your father’s retirement pay. Unfortunately, companies are not required by law to provide death benefits to the beneficiaries of its employees and employees must apply for retirement in order to be entitled to retirement pay. Hope this will be helpful. It will be best to consult with the company itself if they can still provide retirement pay as the decision is still up to them.

      1. May i suggest po, since the company on the first hand offered him to retire when he was 60 y/o,most probably the company were prepared to give him some amount of gratuity or token for the 30 years of his loyal service to them. May i suggest that you try to see the head or the HR head of the company where he worked.

  177. Hi, good day, I will be 60 yrs. old this Sept. 16 2021, I am working as Sales Representative of a Trading Company based in Manila for 3 1/2 years, my question is, can I avail the retirement benefit from the company. thank you

    1. Hi Ricardo. It will depend on the provision in your company’s retirement plan, if any. It will be better to check with your company’s HR about this. In case your company does not have a formal retirement plan filed with the BIR, the provisions in R.A. 7641 will apply. Based on this act, an employee should be at least 60 years old with at least 5 years of service upon retirement in order to be entitled to benefits. With this, since your tenure does not meet the minimum years required yet if you will retire this year, you are not entitled to benefits under R.A. 7641.

  178. Hi, I’m 47 years old and decided for an early retirement this pandemic times in a private company I served for 26 years. The company has no duly retirement plan at the BIR. The company gave me a separation pay that was taxable to 30%. Is there any way I will be refunded with the 30% tax from my separation pay? I am referring to RA no.11494.

    I retired at 47 ,with 26 years of service, would I receive my retirement benefit from sss at age 60 even if the company has no duly registered retirement plan at the BIR?
    Thank you in advance to anyone who can share insight on this matter

    1. Hi! To answer your first question, only retirement benefit received from a duly registered retirement plan with the BIR is tax – exempt under the Republic Act No. 11494 or the Bayanihan Act to Recover as One Act). Hence, we don’t think you can refund the tax from the separation pay.

      For your second question, kindly note that the retirement benefit from SSS is a separate benefit from the retirement plan. Hence, you can still receive a retirement benefit from SSS regardless if the company has registered retirement plan or not.

  179. Hi, I need a support answer, hope you may help, our company has a retirement plan program, in this program is like the other benefits with EE and ER share or contributions,of course the ER has a big share in it, In this R-Plan, only a regular EE is qualified and become a member of this R-Plan Program, then the regular EE, decide not to contribute per month due to his/her financial problem, and affer 7 years in service, he realize he/she decided to become a member, in this case, is there fault in a side of ER or in EE?

  180. Hi!
    I would like to ask, would it be possible to not retire upon reaching age 65? Assuming that the employer and employee would like to continue the employment relationship, would that be allowed? Also, what would be the status of employment?

    1. Hi! Yes, you can still continue to work beyond age 65. As for the status of your employment, we think it would be best to consult your HR on this.

    1. Hello, I’m 85 years old and have worked for 20 years at my company. For the past 5 months I have not been able to work because of illness, however my company still provided me a salary. They now want me to retire since I’m past the age of retirement. However they do not provide a retirement plan. Can they force retirement since I haven’t been working? How much retirement pay am I entitled to? Can they deduct the salary they have been paying me these 5 months to my retirement pay?

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