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Bulletin 07-2014
11 June 2014


Retirement Schemes and Incentives for PSA Employees Seeking Retirement
To supplement the PSA Memorandum 2014-25 Survey of Preference in the PSA
Structure issued on 26 May 2014, seeking to gather inputs on the employees plans
and assignment preference, this Bulletin aims to provide further information on the
various retirement options available under RA 1616, RA 660 and RA 8291, and
applicable incentives under Article 69 of the RA 10625 Implementing Rules and
Regulations (IRR)*. This will also help guide employees in making decisions on their
future plans as early retirement/separation is an option identified in the survey.

1. Retirement Under RA 1616 (take all) and No Incentive Under RA 10625
This scheme provides for a gratuity benefit for retiring employees qualified under this
retirement mode. The gratuity is payable by the last employer. The employee shall
also be entitled to a Refund of Retirement Premiums paid, personal share with
interest and government share without interest.
1.1. To qualify under the mode, a retiree must:

1.1.1. be in government service on or before May 31, 1977
1.1.2. have rendered at least 20 years of service regardless of age and
employment status
1.1.3. have his/her last 3 years of service prior to retirement, be continuous,
except in cases of death, disability, abolition or phase out of position due
to reorganization.

1.2. Benefits in store for retiree
Since RA 1616 is considered as the Take All Retirement mode, it provides the
following benefits:
1.2.1. Gratuity (no limit) payable by the last employer based on the total
creditable service converted into gratuity months multiplied by the
highest compensation received. The gratuity months shall be computed
as follows:
Years of Service Gratuity Months
First 20 years one (1) month salary
20 years to 30 years 1.5 months salary
Over 30 years two (2) months salary
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1.2.2. Refund of retirement premiums consisting of personal contributions of

the employee plus interest, and government share without interest,
payable by the GSIS.


2. Retirement under RA 660 plus incentive under RA 10625

2.1. To qualify for this retirement mode, a retiree should:

2.1.1. have entered government service on or before May 31, 1977.
2.1.2. have his/her last three years of service prior to retirement be continuous,
except in cases of death, disability, abolition, and phase- out of position
due to reorganization.
2.1.3. have a permanent appointment status
2.1.4. meet the age and service requirements under the "Magic 87" formula.
Based on the formula, a retiree's age and years in service when added
up should total at least 87.

2.2. The " Magic 87" formula is shown below:
Age 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Service 35 34 33 32 31 30 28 26 24 22 20 18 16 15
The maximum monthly pension for those above 57 years old shall be 80% of the
Average Monthly Salary (AMS) received during the last 3 years immediately
preceding retirement. The Maximum pension for those aged 57 and below shall
be 75% of the AMS.v
On completion of thirty years of total services and attainment of age fifty-seven
years, a member shall have the option to retire. In all cases, the last three years
of service before the retirement must be continuous, and he has made
contributions for at least five years, which contributions may, upon his request
approved by the Board, be deducted from his life annuity under such terms and
conditions as the Board may prescribe.
In the case of those who are at least fifty-seven years of age a period of service
shorter than thirty years may be allowed, provided that each year decrease in
service shall be compensated by one-half year increase in age over fifty-seven
years. A younger age of retirement may be permitted provided that each year
decrease below fifty-seven years shall be compensated by one year increase in
service over thirty years. If an employee is a laborer or one whose work is mostly
manual, the ages mentioned above may be decreased by not more than five
years at the discretion of the System. In all cases no one shall be entitled to
retirement benefit if his age is below fifty-two years or his total service is less
than fifteen years.


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2.3. Packages in store for retiree

2.3.1. Option 1: Automatic Pension - Pensioners below 60 years old may
choose to receive either an automatic monthly pension for life or an
option to avail of a lump sum. The lump sum, which can be requested
every six months, means they can receive their one-year worth of
monthly pension in advance for a period of five years. On the sixth year,
they will start receiving their lifetime monthly pension.

2.3.2. Option 2: Initial three-year lump sum - For those who are at least 60
years old but less than 63 years on date of retirement, the benefit is a 3-
year lump sum. The subsequent two -year lump-sum shall be paid to the
retiree on his 63rd birthday. If the retiree is still living after the 5-year
guaranteed period, he shall be entitled to a monthly pension for life.

2.3.3. Option 3: 5-Year Lump sum - For those who are 63-65 years old, they
can avail of a five-year lump sum then after five years, they will receive a
monthly pension for life.


3. Retirement under Republic Act 8291 plus incentive under RA 10625)

3.1. To qualify for this retirement mode, a retiree must:

3.1.1. have rendered at least 15 years of service and must be at least 60 years
of age upon retirement.
3.1.2. not be a permanent total disability pensioner.
Unlike other retirement modes, the last three years of service of a retiree need
not to be continuous under RA 8291.
3.2. Packages in store for retiree

3.2.1. Option 1: 5-Year Lump Sum and Old Age Pension. The retiree can
get his/her five-year worth of pension in advance. The lump sum is
equivalent to 60 months of the Basic Monthly Pension (BMP) payable at
the time of retirement. After five years, the retiree will start receiving
his/her monthly pension.

3.2.2. Option 2: Cash Payment and Basic Monthly. The retiree will receive a
Cash Payment equivalent to 18 times the Basic Monthly Pension (BMP)
payable upon retirement and then a monthly pension for life payable
immediately after his retirement date.
The BMP is computed as follows:
a) If period with premium payments is less than 15 years:
BMP = .375 x RAMC (Revalued Average Monthly Compensation)
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b) If period with premium payments is 15 years and more: BMP =.025 x

RAMC x period with premium payments.
The BMP, however, shall NOT exceed 90% of the Average Monthly
Compensation (AMC).
RAMC stands for Revalued Average Monthly Compensation and is
computed as follows:
RAMC= P700 + AMC
AMC = Total Monthly Compensation received during the last 36
months of service divided by 36
Application of the AMC Limit
The maximum amount of the Average Monthly Compensation (AMC) to be
used as the base for computing pensions and other benefits of a member
shall be the AMC limit prevailing at the time the contingency/ies occurred.
Thus, pursuant to the lifting of the AMC limit, the monthly pension of a
member with at least 15 years of creditable service who is in the service
on or after J anuary 1, 2003 shall be computed on the basis of his/her
AMCs without limit.

4. Incentives under RA 10625

4.1. Aside from retirement gratuity benefits under RA 660 and RA 8291,
retiring employees shall be provided with the following incentives under
RA 10625:

4.1.1. 1/2 month of the present basic salary for every year of government
service and a fraction thereof, for those who have rendered twenty (20)
years of service and below;

4.1.2. 3/4 month of the present basic salary for every year of government
service and a fraction thereof, computed starting from the 1st year, for
those who have rendered twenty-one (21) to less than thirty-one (31)
years of service; and,

4.1.3. 1 month of the present basic salary for every year of government service
and a fraction thereof, computed starting from the 1st year, for those
who have rendered thirty-one (31) years of service and above.

4.2. In addition, the affected personnel shall be entitled to the refund of PAG-
IBIG contributions, and the commutation of unused vacation and sick
leave credits.

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5. Retirement Options for those who would retire below 60 years old: Retirement

For employees who are below 60 years old, the following are their options if they
prefer to retire.

5.1. Option 1 RA 1616
All the benefits under RA 1616 but without the incentive under RA 10625,
provided that the qualification requirements must be met by the retiree.
5.2. Option 2 - RA 660
Automatic monthly pension for life or an option to avail of a lump sum (refer to
retirement options under RA 660) plus incentive under RA 10625, provided that
the qualification requirements must be met by the retiree.
5.3. Option 3 - RA 8291:
Cash payment of 18 times the Basic Monthly Pension (BMP) payable upon
retirement plus incentive under RA 10625. Monthly pension for life shall be paid
immediately when the retiree reaches the age of 60.


*Note: Article 69 of the IRR states that Personnel of the merged agencies who will not
be absorbed into the new staffing pattern due to redundancy or failure to comply with
the qualification standards; position being offered under the new staffing pattern but
who decline such appointment due to diminution in rank, benefits and work conditions;
position being offered under the new staffing pattern without any diminution in rank,
benefits and work conditions but who decline such appointment, if qualified, shall be
given the option to avail themselves of any of the following [retirement schemes as
specified in this Bulletin, reflected as Parts 1-4] whichever is beneficial to them.
References:
a) Republic Act No. 1616 - http://www.gsis.gov.ph/default.php?id=96
b) Republic Act No. 660 - http://www.gsis.gov.ph/default.php?id=102
c) Republic Act No. 8291 - http://www.gsis.gov.ph/default.php?id=111
d) Republic Act No. 10625 - http://www.gov.ph/2013/09/12/republic-act-no-10625/