mamaravesph's blog: How Much Retirement Pay Should I Get From My Employer?

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Retirement is one of those goals any employee dream of. It is the time when you see yourself, not working but still earning or still has money to spend on your needs and / or wants. But rarely, employees know how much money they should anticipate to get when they get their retirement pay from their employers or when they can avail of such benefit.

But who and when can someone avail of a retirement benefit?

An excerpt from the Philippine Labor Law Article 287 says, “Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.. In the absence of a retirement plant or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.. one-half (1/2) month shall mean (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. Retail, service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision.”

In short, employees with more than 5 years of service to his/her employer WITH a retirement age of 60 years old or more, but not more than 65 years old may claim for a retirement pay.

How do you compute this?

For example: Mr. Juan dela Cruz,

60 years old, worked for the same company for 20 years, salary at retirement age is 30,000, Service Incentive Leave Pay = 1,250 per day

RETIREMENT PAY = ((1/2 month salary) + (1/12 of 13^th month pay) + 5(Service Incentive Leaves Pay))Years of Service

RETIREMENT PAY = ((30,000/2) + (30,000/12) + 5 (1,250)) 20

RETIREMENT PAY = (15,000 + 2,500 + 6,250)20

RETIREMENT PAY = 475,000

Which means, Mr. Dela Cruz will get Php475,000 in retirement pay from his employer. Then add your SSS retirement benefit, the total of those two can be a decent amount of money to start your retirement. (if you want to know how to compute for your SSS retirement benefit, please visit http://mamaravesph.blogspot.com/2013/12/how-to-compute-for-your-sss-monthly.html) But I warn you that this soon can deplete or diminish as you go through years of retirement expenses, medical and hospital expenses, trips and vacations. So, plan your retirement and don’t rely on your retirement pay alone.

For more retirement planning tips and ideas, please like the Facebook page: http://www.facebook.com/FinancialFreedomBlueprintPH

** I am not a law student or professor, but this is how I understand Philippine’s labor code.

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