U.S. Citizen Who Will be Philippine SSS Pensioner

QUESTIONS About SSS Pension in the Philippines from Olive:

My name is Olive and I moved to the US when I was 25 years old. I am now 58 years old. I was a scientist there in PI for 3 years. My employer made a total of 15 months contributions for me and in the past few years, I made voluntary contributions. Total accrued monthly contributions is 42 months. I am aware that, in order to retire with a pension, I need 120 months of contributions. Please enlighten me with answers to the following questions:

1. Can I make catch up contributions to SSS?

Scenario: Since I have 78 months to catch up to make 120 months, can I pay $1100 for the whole 26 months bi annually (every 6 months)? In short I will be able to pay my 78 months of contributions in only 1 and half years instead of 7 years. I will be able to finish my 120 months contribution before I turn 60 years old. However, I will not collect my pension until I am 65 years old.

2. Can I contribute the maximum amount after I finish my 120 months?

Scenario: I was told that the last 5 years of contribution will be the basis of the calculation for the retirement benefits. Please let me know if that is false. I would appreciate it if you could please show me how to calculate my benefits, if I retire at 65 years old, with the information I furnished. To clarify, I would have made 93 monthly payments of 1100 php and 60 monthly payments of 1760 php at age 65. My employer’s contributions are very small comparatively speaking.
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I am really confused about this SSS pension calculation. I became aware that I have an SSS number in the Phil. only in the past few years . I was told that my first employer applied for an SSS number for me. I did not have a clue. I suppose that is different now. Anyways, thank you so much for taking the time to read and answer my post. I have to be very detailed as I need to have peace of mind regarding this matter.

Best regards, Olive

ANSWERS:

Hi Olive,

1a.  About continuation of payment of contributions:

Yes, you can catch up with the required 120 contributions to qualify for pension. But you’re not allowed to make payments for the needed 78 contributions in just 1 year and a half.  You can pay in advance, maybe up to a year in advance, but each of your advance monthly payments will be posted or applied as each month actually rolls in. This means you’ll be able to complete your 78 payments around 2021, when you’re about 64.

1b.  Why it’s not advisable to pay too far in advance:

There’s the possibility that monthly SSS contributions will be increased. Since underpaid and overpaid monthly contributions are not posted, but are put on hold, it is better to always pay the exact amount of monthly contributions.  It takes effort and time to file papers to correct underpayments or overpayments and to make follow-ups.

2a.  About the last 5 years of contributions

Yes, it is true that your last 60 monthly contributions immediately prior to your semester of retirement significantly affect your pension amount, so I suggest you start increasing your monthly contributions now by 1 salary level every month. See the instructions on this SSS RS5 form about increasing monthly contributions.  You have the option though to increase your contribution immediately to the maximum, as surely your monthly income is much more than the current maximum SSS monthly salary credit (16,000 pesos), and you have the document to prove your current income (in the rare case it will be questioned in the future).

Update as of Feb 2016:  SSS released new rules on increasing monthly contributions

2b.  About pension computation

I have written about how to estimate your pension here. Assuming that all these 3 following factors are true — that your last 60 contributions are all maximum (maximum salary credit is 16,000 pesos), that there’s no increase in monthly contributions, and that your total no. of credited years is 10, your pension will be 40% of 16,000 pesos = 6,400 pesos.

3.  About your SSS registration

I hope you were registered properly by your first employer, meaning you gave your employer your birth certificate and you signed the E1 form. I don’t know if registration was more lax in the past years, but you need to check your SSS no. and other SSS data items. You can register at sss.gov.ph so you can check your data.  Use Internet Explorer as your browser.

But the SSS website is soooo busy these past weeks, so check from time to time. Another thing is you need 6 digits from your transaction no. (contribution payment receipt) to be able to register.

Thanks a lot for reading our blogpost. Please comment again, if you have other questions.

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