SSS retirement benefit or pension as they normally call it is one of the few benefits employees are entitled to receive when they retire. So before you empty your savings going all YOLO (You Only Live Once) and FOMO (Fear Of Missing Out) craze you may want to consider how much you’ll be getting from SSS by the time you’ll retire. Are you ready to know how
small much it will be?
Yes I know, I also suddenly felt like a certified tito like how they call it now because of all these acronyms. Lucky me there’s Google to provide me the info haha!
SSS Retirement Benefit (Quick Links):
UPDATED (2019): This post is revised based on the newly passed R.A. 11199 or “Social Security Act 2019“.
Know Your SSS Contribution Table
I’m going to teach how to read the table below. Yes, I know how you despise seeing this kind of table so do I hehe. Sadly, this is needed in order for you to compute your monthly pension.
Let’s begin with the range of compensation. This is just your basic monthly salary in which the remaining components are based on. Monthly Salary Credit (MSC) is the median of the range of compensation. It’s also good to note that the maximum MSC is only set at 20,000. The contribution rate on the table is at 12% of your monthly salary credit which is being shared by you (4%) and your employer (8%).
I know you need an example so this is what you are waiting for. If an employee has a salary of Php 25,000 per month then his MSC is pegged at Php 20,000 only. Remember that it is already the maximum MSC in the table, right?
Average Monthly Salary Credit (AMSC) is computed based on the last 5 years of service.
Credited Years of Service (CYS) is the total number of years your SSS contribution is paid. One CYS is equivalent to at least 6 months paid contribution in any given year.
3 Simple Formula to Compute Your Pension
After knowing the terms, you can finally compute for your pension. SSS provided three formulas an employee like you can use to compute for your pension. Because there are three formulas, you will also get three answers and whichever is the highest among them will be your monthly pension.
Pursuant to Memorandum from the Executive Secretary in 2017, by authority of the President, an additional Php 1,000 shall be given to all pensioners.
The first formula will give the highest amount if you’re planning to work for a very long time. Notice the 2% addition to your pension for every CYS when you surpass the 10 years mark. The second formula is something you don’t even want to have as your pension, right? Come on, even that ₱2400 plus Php 1,000 will not be enough for your maintenance medicine. The last formula, however, is very straightforward and easy to compute.
With all the formulas presented you might feel the need for an example so I decided to add one. In this example, Mr. Wise started working at the age of 20 and he is planning to retire when he reaches the age of 60. His salary for the last 5 years is ₱60,000. Can you help him in computing his pension?
CYS: 40 years (started working at 20 and plans to retire at 60)
AMSC: ₱ 20,000 (this is the maximum MSC regardless of his salary)
If you’ll look at the figure above, formula #1 provides the highest amount which means that this is the pension Mr. Wise Guy will get starting at age 60.
Suan, malaki-laki na din pala yung pension sabi mo maliit lang.
A good thing to note is that the amount was calculated from 40 years of credited years of service. If you are planning to have an early retirement then your pension will be lesser. Personally, I don’t want to work for that long. I want to enjoy life and spend more time with my family. If you are like me then a pension of ₱17,300 is pretty impossible knowing I’m not planning to work for that long.
Average SSS Retirement Benefit
Do you know the average pension retirees get? The illustration above is just an example so don’t be excited yet. The following is the average SSS pension throughout the years and you’ll be alarmed from knowing that it may not be enough to sustain a living.
Can you get over with those digits? These are only averages so you must keep yours on top of it but if you don’t and settle with those numbers then your retirement will be doomed. So how can you level up the game and secure your future? Simple, you must have a contingency plan. Don’t just settle saving your money, you must also invest to beat inflation.
While SSS provides a good retirement benefit. You should not rely on it solely if you don’t want to struggle financially during your golden years. Consider investing your money in a mutual fund, UITF, VUL plan, etc. that will not only beat inflation but also provide you a comfortable retirement you deserve.
Want a FREE Financial Planning Session? Contact me thru the following options.
Engr. Federico Suan, Jr.
Sun Life of Canada (Philippines) Inc.
15th Floor Frabelle Building
Rada St, Legazpi Village Makati City
Landline: (02) 705-9666
Hi! This is Engr. Federico Suan, Jr. a registered Electronics Engineer and a proud Financial Advisor of Sun Life. I am Licensed Insurance agent by Insurance Commission. My mission is to develop financially wise Filipinos thru proper wealth management. For your immediate concerns, you can text/call me at 0917-775-8352 (Globe) and 0928-603-0127 (Smart) or e-mail me via firstname.lastname@example.org. You can also send an e-mail at my official Sun Life e-mail address thru email@example.com.