Retirement pay calculator (RA 7641)
If your company has no retirement plan, the Labor Code as amended by Republic Act No. 7641 sets a minimum retirement pay.
You qualify from 60 years of age with at least 5 years in the company. Retirement is compulsory at 65 years of age.
How it's calculated
- For every year of service you get one-half month salary. A fraction of 6 months or more counts as a full year.
- The law defines one-half month salary as 15 days of pay, plus one-twelfth of your 13th month pay, plus the cash value of 5 days of service incentive leave.
- The total is that amount times your years of service.
An example
With a daily rate of ₱1,000, a 13th month pay of ₱26,000 and 20 years of service, one-half month salary is ₱22,166.67 and the retirement pay is ₱443,333.40.
Frequently asked questions
Is one-half month salary just 15 days?
No. The law adds one-twelfth of your 13th month pay and the cash value of up to 5 days of service incentive leave to the 15 days, unless your employer gives broader inclusions.
Who is not covered?
Retail, service and agricultural establishments or operations employing not more than 10 workers. If your company has a retirement plan or agreement, it applies instead, as long as it is not lower.
Can a company plan pay less?
No. Retirement benefits under a collective bargaining agreement or other agreement cannot be lower than the ones set by this law.
Key terms
- RA 7641
- Republic Act No. 7641, approved in 1992, which amended Article 287 of the Labor Code on retirement.
- Service incentive leave
- A leave benefit under the Labor Code. The retirement formula adds the cash value of up to 5 days of it.
Up-to-date official data
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