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Commentary

Retirement benefits under SSS

Before pension is granted, however, one must make sure that his/her contributions to the SSS are valid.

Dean Nilo Divina

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Retirement is something all working people look forward to. The promise of breaking free from the 8 a.m. to 5 p.m. routine with plenty of time for family and leisure indeed makes the thought of retirement exciting. In preparing for the reality of life after retirement, financial security is foremost in the list.

For private employees in the Philippines, the Social Security System (SSS) administers retirement benefits. It administers two types of retirement benefits. First is the monthly pension, which is a lifetime cash benefit paid to a retiree who has paid at least 120 monthly contributions to the SSS prior to the semester of retirement. The second type is the lump sum amount, which is granted to a retiree who has not paid the required 120 monthly contributions. It is equal to the total contributions paid by the member and by the employer including interest.

The monthly pension depends on the member’s paid contributions, his credited years of service, and the number of his dependent minor children that must not exceed five. The monthly pension is paid for not less than 60 months. On the other hand, a member who retires after age 60 with a total of 120 monthly contributions may be qualified to a monthly pension.

There are also pensioners who retire more than once. Such retirees are entitled to the higher of the monthly pension computed for the first retirement claim; or the recomputed monthly pension for the new claim.

Aside from the retirement pay, the SSS also provides an allowance for legitimate, legitimated or legally adopted, and illegitimate children, conceived on or before the date of retirement of a retiree equivalent to 10 percent of the member’s monthly pension, or P250, whichever is higher.

Before pension is granted, however, one must make sure that his/her contributions to the SSS are valid. In Haveria vs SSS (GR 181154, 22 August 2018), Haveria was employed with the SSS from 1958 to July 1984. During his employment, he became a member and an officer of the SSS Employees’ Association (SSSEA). The SSSEA reported him as an employee for purposes of SSS coverage, and Haveria’s membership was approved. Thereafter, the SSSEA remitted his monthly contributions from 1966 to 1981. After his employment with the SSS, Haveria was employed with private entities. When he reached the retirement age (60 years old) in 1997, he claimed his retirement benefits. In 2002, SSS ordered the suspension of Haveria’s retirement benefits upon finding that there was no employment relationship between him and SSSEA.

The Supreme Court ruled that the SSSEA, a labor organization, cannot be considered an employer under the law. As a government employee, Haveria would have been qualified for voluntary coverage under Section 9 (b) of RA 1161 (which was in effect at the time of his registration) had he registered as a voluntary member while working with the SSS. However, he was registered as a compulsory member on the mistaken claim that he was an employee of a private entity, the SSSEA. Consequently, his compulsory coverage while supposedly employed with the SSSEA was erroneous.

On the issue of estoppel, the Supreme Court ruled that the principle cannot be invoked against the SSS. While indeed the SSS had registered him as a member and accepted his monthly contributions, it was the SSSEA and Haveria who made the incorrect representation to the SSS that an employment relationship existed between them. As a result of said representation, the SSS erroneously registered Haveria as a compulsory member. The High Court held that if the act, conduct or misrepresentation of the party sought to be estopped is due to ignorance founded on innocent mistake, estoppel will not arise — which is the case here. Thus, Haveria cannot claim estoppel against the SSS as the latter merely relied on the former’s representation.

Nevertheless, in the interest of justice and equity, Haveria’s contributions remitted by the SSSEA was considered as voluntary contributions so that his contributions can reach the minimum 120 monthly contributions for qualification to a retirement pension. The remainder was ordered returned to Haveria, subject to offsetting of the pensions paid to him in excess, if any, prior to the suspension of payment of pension.

Email: cabdo@divinalaw.com

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