How is SSS retirement pension computed?

By Susie Bugante, Businessmirror, Feb 21, 2017

Members of the Social Security System (SSS) often wonder how their retirement pensions are computed. Today’s column will attempt to explain how the basic pension is arrived at following the provision of Section 12 of the SSS Act of 1997.

It says, the monthly pension shall be the highest of the following amounts: The sum of the following: P300; plus 20 percent of the average monthly salary credit (AMSC); plus 2 percent of the AMSC for each credited year of service (CYS) in excess of 10 years; or 40 percent of the AMSC; or minimum pension of P1,200 for members with at least 10 CYS; and P2,400 for those with 20 CYS.

Using these three computations, let us assume the case of someone who contributed for 25 years based on the AMSC of P16,000. Using the first formula, we have P300 + 20 percent (16,000) + [2 percent (16,000) x (25-10)]=P300 + P3,200 + [320 x15]=P8,300. The basic pension amount in this case is P8,300.

The second formula, which is 40 percent of the AMSC, will be 40 percent of P16,000=P6,400.

Applying the third formula would yield P2,400 as the basic pension. Since the law provides that the highest amount shall be granted as the pension, this means that the basic pension shall be P8,300. If the retiree pensioner still has dependent children at the time of retirement, each dependent child, not to exceed five starting from the youngest, shall be entitled to a dependent’s pension, of 10 percent of the basic pension, or P250 per child, whichever is higher, until they reach the age of majority, get employed or get married.

It has often been said for every peso that a member contributes, he or she gets no less that P16 in return. Let us take, for example, the cases of Juan and Pedro. Juan has a monthly salary credit of P1,000 (the lowest salary level subject to the SSS contribution) and contributes to SSS based on this salary for 25 years, while Pedro has a monthly salary credit of P16,000 (the maximum salary as of to-date) and also contributes for 25 years. Juan’s monthly contribution of P110 would total P33,000 after 25 years of contribution to the SSS, while Pedro, whose monthly contribution of P1,7650, would sum up to P528,000 after 25 years.

If they both file for retirement pension at the same time and receive pensions for 25 years, Juan, whose pension will amount to P2,400 per month, would have received a total of P780,000, while Pedro, whose monthly pension is P8,300, would have received P2,699,500 after 25 years.

Furthermore, if they both pass away and are survived by their legal spouses, their pensions will cross over to their spouses as their primary beneficiaries.

Indeed, the SSS is a good deal for its members, and may be considered the cheapest insurance in town!

For more details on SSS programs, members can drop by the nearest SSS branch, visit the SSS web site (www.sss.gov.ph), or contact the SSS call center at 920-6446 to 55, which accepts calls from 7 a.m. on Monday all the way to 7 a.m. on Saturday.

Susie G. Bugante is the vice president for public affairs and special events of the SSS. Send comments about this column to susiebugante.bmirror@gmail.com.