LOWERING THE RETIREMENT AGE OF

GOVERNMENT EMPLOYEES
1. What is the retirement age of government employees?
At present, the optional retirement age is 60 and the compulsory retirement age is 65.
2. Why is there a concern on the retirement age of government employees?
The concern is triggered by Congress and Senate bills proposing to lower the optional and
compulsory retirement age of government employees.
3. Was GSIS consulted in these bills?
Yes, the Committee on Government Corporations and Public Enterprises of the Senate
solicited GSIS’s comments on these bills.
4. What is GSIS’s position on lowering the retirement age?
GSIS recognizes the intention of proposed bills to afford government employees the
chance to retire early and enjoy their hard-earned benefits. However, it should also consider
that any change in the benefit package has a corresponding fund liability that would be
hard to sustain, given the present poor investment environment and successive increments
in government employees’ monthly salary.
Because pension is based on the monthly salary, GSIS’s liability has also increased. GSIS is
worried because the increase in its liability coincides with the decrease in the fund income
brought about by low interest in the market. Interest rate in the market is beyond GSIS’s
control. Previously earning double-digit rates, GSIS is earning merely single-digit rates now.
5. Will lowering the retirement age shorten the actuarial life of GSIS’s SIF?
Yes. Lowering the retirement age automatically shortens the contribution period of GSIS
members to SIF. This means that GSIS will collect reduced amount of contributions. It will
also pay pension much earlier than originally planned. Altogether, these conditions – plus
the increase in government salary, which results in increased pension – will shorten the
SIF’s actuarial life.
GSIS is gravely concerned that the untimely receipt of benefit resulting from early
retirement will continuously shorten the actuarial life. To address this, it may resort to two
options – increase the contribution of those who are still in service or reduce benefits of
the present and next generation of pensioners.
The actuarial life of SIF is 26 years. This means that it will last until 2045 from 2019. Based
on GSIS’s studies, if any of the bills would be implemented, the actuarial life will drop from
four to 14 years. Thus, instead of until 2045, the fund life would will be until 2041 only, or
much worse, until 2031.
Retirement Age
Scenario Optional Age Compulsory Age Fund Life
 Base Case 60 65 2045
Scenario 1 56 65 2041
Scenario 2 55 65 2040
Scenario 3 55 60 2031
6. Will GSIS be able to pay its SIF liabilities if the retirement age is lowered?
We are unsure of the future. GSIS might be too conservative with its projections. Only time
will tell. As administrator of the fund for government employees that faces an uncertain
future, strict conditions are taken into account in GSIS’s studies, especially because once
given, benefits may no longer be taken back.
GSIS is worried that if the retirement age is lowered, GSIS will have a weakened capacity to
pay its SIF liabilities. This is because the pension will be paid earlier while contributions
that GSIS receives will decrease and it’s uncertain that it will always earn a big amount.
At present, below 70% of the SIF liabilities to members can be paid using GSIS assets. For
every additional benefit that GSIS provides, its liabilities also increase and incur a
corresponding decrease in the capacity to pay its liabilities using its assets.
7. Will the monthly pension also decrease if the retirement age is lowered?
Yes, because their years of service would be fewer and their monthly salary lower. Both
could have been be higher had members stayed on for four more years. If members retire
at an earlier age, the corresponding pension computed from their present salary will also
decrease.
Example:
A 40-year-old employee of the Department of Education with 11 years of government
service has a monthly salary of Php22,810.61.
If such employee completes 15 years of service or more, and opts to retire at age 56, his or
her monthly pension is estimated to reach only Php22,018.48. This is lower by about
Php5,301.21 or 19.40% lower than a monthly pension of Php27,319.69 that he or she could
have received at a retirement age of 60.
Retirement Age Monthly Pension
60 27,319.69
56 22,018.48
Difference 5,301.21
% 19.40%
8. If a lower retirement age will be implemented, what does GSIS recommend to
mitigate its effects on SIF?
If a lower retirement age would be implemented, GSIS recommends the following:
a. Increase significantly the premium contribution rate;
 b. Provide needed funds to prevent substantive impact on SIF’s actuarial life; and
c. Adjust the benefit paid to those who will retire early to protect the welfare of
those who will be left behind to subsidize their pension.
9. What bills have been proposed to lower the retirement age of government
employees?
The bills proposing to lower the retirement age of government employees are as follows:
a. House Bill No. (HBN) 8683 – An Act Lowering the Optional Retirement Age of All
Government Workers from Sixty (60) Years Old to Fifty-Six (56) Years Old;
b. Senate Bill No. (SBN) 1872 – An Act Lowering the Optional Retirement Age of
Public School Teachers from Sixty (60) Years Old to Fifty-Five (55) Years Old;
c. SBN 1222 – An Act Lowering the Optional Retirement Age of Public School
Teachers from Sixty (60) Years Old to Fifty-Five (55) Years Old;
d. SBN 1287 – An Act Lowering the Compulsory and Optional Retirement Age of
Public School Teachers;
e. SBN 1289 – An Act Lowering the Compulsory and Optional Retirement Age of
Government Employees
10. What are the policy trends on retirement age?
GSIS studies show that the proposed bills do not consider the aging population resulting
from longer life expectancy and lower fertility rates.
Life expectancy is expected to rise to 72.7 years in years 2045-2050 (from 67.5 years in
2005-2010), while the number of people aged 60 and above will increase in year 2030. In
the Philippines, based on 2015 data, population of those in this age range will balloon by
3% in 2030.
In Australia, the retirement age was slightly raised to 67 in 2017 and may be implemented
until 2023. The same increase is observed in a number of Asian countries due to their
aging population, which contradicts the proposed bills in the Philippines.
The policymakers of the Association of Southeast Asian Nations (ASEAN) have also been
taking the necessary steps already to address the possible decrease in workforce in the
coming years.
In Malaysia, the retirement age was raised to 60 in 2012 from 55, with plans to further
increase it to 65.
Thailand also did the same — to age 60 from 55.
Vietnam is also considering to increase the retirement age of males to 62 from 60, and that
of females to 60 from 55.
(https://www.gsis.gov.ph/frequently-asked-questions/lowering-the-retirement-age-of-
government-employees/)
RETIREMENT UNDER REPUBLIC ACT 660
(MAGIC 87)
Retirement under RA 660 (also known as ‘Magic 87’), may be availed by members who are 52 years
old  for as long as they have already been in government service for the past 35 years.
Qualifications
1. Entered government service on or before May 31, 1977;
2. Last three years of service prior to retirement should have been continuous, except in
cases of death, disability, abolition, and phase- out of position due to reorganization;
3. Appointment status should be permanent;
4. Meet the age and service requirements under the “Magic 87” formula. Based on the
formula, a retiree’s age and years in service should be added up and should total at least
87.
The “Magic 87” formula is shown below:

5 5 5 5 6 6
Age 52 3 54 5 56 7 58 9 60 1 62 3 64 65

3 3 3 2 2 1
Service 35 4 33 2 31 0 28 6 24 2 20 8 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 three years immediately preceding retirement. The maximum
pension for those aged 57 and below shall be 75% of AMS.
 Retirement Packages 
Option 1: Automatic Pension – Under this option, retirees 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 monthly
pension in advance for a period of five years. On the sixth year, they will start receiving their
lifetime monthly pension.
 Option 2: Initial three-year lump sum – Those who are at least 60 years old but less than 63 years
on the date of retirement are entitled to a three-year lump sum. The subsequent two-year lump sum
will be paid to retirees on their 63rd birthday. Retirees still living after the five-year guaranteed
period, will be entitled to a monthly pension for life.
 Option 3: 5-Year Lump sum- Those who are 63-65 years old may avail of a five-year lump sum.
After five years, they will receive a monthly pension for life.
(https://www.gsis.gov.ph/active-members/benefits/retirement/retirement-under-republic-act-
660/)
REPUBLIC ACT No. 10154

AN ACT REQUIRING ALL CONCERNED GOVERNMENT AGENCIES TO ENSURE THE EARLY

RELEASE OF THE RETIREMENT PAY, PENSIONS, GRATUITIES AND OTHER BENEFITS OF
RETIRING GOVERNMENT EMPLOYEES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress

assembled:

Section 1. Declaration of State Policy. - It is hereby declared that it is the policy of the State
to ensure the timely and expeditious release of the retirement pay, pensions, gratuities
and other benefits of all retiring employees of the government. Public officers and
employees who have spent the best years of their lives serving the government and the
public should not be made to wait to receive benefits which are due to them under the
law. Accordingly, it is hereby mandated that highest priority shall be given to the
payment and/or settlement of the pensions, gratuities and/or other retirement benefits of
retiring government employees.

Section 2. Period for Release of Retirement Benefits. - The head of the government agency
concerned, the President and other responsible officers of the Government Service Insurance
System (GSIS), the President and other responsible officers of the Home Development Mutual Fund
(Pag-IBIG Fund) and/or the Secretary and other responsible officers of the Department of Budget
and Management (DBM) shall ensure the release of the retirement pay, pensions, gratuities, and
other benefits of a retiring government employee within a period of thirty (30) days from the date of
the actual retirement of said employee: Provided, That all requirements are submitted to the
concerned government agency at least ninety (90) days prior to the effective date of
retirement: Provided, further, That in the case of the GSIS, it shall pay the retirement benefits of the
retiring employee on his/her last day of his/her service to the government, pursuant to the GSIS
Charter.

Section 3. Retiring Employees With Pending Cases, - In the case of retiring government employees
with pending cases and whose retirement benefits are being lawfully withheld due to possible
pecuniary liability, the head of the agency where such case is pending shall ensure that the said
case shall be terminated and/or resolved within a period of three (3) months from the date of the
retirement of the concerned, employee: Provided, That in case the concerned agency fails td
terminate and/or resolve the case within the said period without any justifiable reason(s), the
retirement benefits -due to the employee shall: be immediately released to him/her without prejudice
to the ultimate resolution of the case; except, when the delay is deliberately caused by the retiring
employee.

Section 4. Coverage. - This Act shall cover all branches, agencies and/or instrumentalities of the
government, including government-owned and/or controlled corporations (GOCCs), excluding
personnel of the Armed Forces of the Philippines, and shall be applicable both to applications for
compulsory retirement and optional or early retirement as authorized by law.

Section 5. Penal Provisions. - The unjustified failure and/or refusal to release the pension, gratuities
and other retirement benefits due to a retiring government employee within the periods prescribed
above or to comply with any provision of this Act shall be a ground for the filing of administrative
disciplinary action against the erring officer(s) and/or employee(s). Such erring officer(s) and/or
employee(s) shall, after hearing and due proceedings, be penalized with suspension from the
service without pay from six (6) months to one (1) year, at the discretion of the disciplining authority.

This penalty shall not apply if the release of the retirement benefits could not be accomplished due
to force majeure and other insuperable causes. In such cases, the thirty (SO)-day period shall be
counted from the time such cause(s) cease(s) to exist.

Section 6. Implementing Rules and Regulations. – The Civil Service Commission (CSC), after
consultation and coordination with the government agencies and/or instrumentalities affected by this
Act, including, but not limited to, the GSIS, the Pag-IBIG Fund, the Constitutional Commissions, the
Legislature and the Judiciary as well as the Office of the Government Corporate Counsel (OGCC)
and the Department of the Interior and Local Government (DILG), shall promulgate and issue the
appropriate rules and regulations for the proper implementation of this Act. 1avvphi1

Such rules and regulations shall include provisions prescribing uniform periods for the advance filing
of retirement applications in the different agencies concerned, as well as standard periods for the
processing and release of claims for retirement benefits, gratuities and allowances which will
pinpoint responsibility in case of delay in the release thereof.

Section 7. Separability Clause. - If any provision, part or portion of this Act shall be held as invalid,
the provisions, parts or portions of this Act not otherwise affected thereby shall remain valid and
effective.

Section 8. Repealing Clause. - All laws, executive issuances, orders and rules and regulations
contrary to or inconsistent with the provisions of this Act or any part thereof are hereby repealed,
amended and/or modified accordingly.

Section 9. Effectivity. - This Act shall take effect fifteen (15) days following its publication in
the Official Gazette or in two (2) newspapers of general circulation in the country.

Approved,

(https://lawphil.net/statutes/repacts/ra2011/ra_10154_2011.html)

Republic Act No. 6683             December 2, 1988

AN ACT PROVIDING BENEFITS FOR EARLY RETIREMENT AND VOLUNTARY SEPARATION

FROM THE GOVERNMENT SERVICE, AS WELL AS INVOLUNTARY SEPARATION OF CIVIL
SERVICE OFFICERS AND EMPLOYEES PURSUANT TO VARIOUS EXECUTIVE ORDERS
AUTHORIZING GOVERNMENT REORGANIZATION AFTER THE RATIFICATION OF THE 1987
CONSTITUTION APPROPRIATING FUNDS THEREFORE, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress

assembled:

Section 1. Declaration of Policy. - It is hereby declared the policy of the State to promote
economy, efficiency and effectiveness in government operations, particularly in the delivery of
essential public services. For this purpose, the State shall endeavor to streamline government
functions and to maintain necessary positions through an appropriate retirement and voluntary
separation scheme.
Section 2. Coverage. - This Act shall cover all appointive officials and employees of the National
Government, including government-owned or controlled corporations with original charters, as well
as the personnel of all local government units. The benefits authorized under this Act shall apply to
all regular, temporary, casual and emergency employees, regardless of age, who have rendered at
least a total of two (2) consecutive years of government service as of the date of separation.
Uniformed personnel of the Armed Forces of the Philippines including those of the PC-INP are
excluded from the coverage of this Act.

Section 3. Early Retirement and Voluntary Separation Benefits. - All appointive government
officials and employees included in the coverage hereof who voluntarily elect in writing to be retired
or separated from the service and whose retirement has been approved under the provisions of this
Act shall be paid retirement or separation benefits equivalent to one and one-fourth (1 1/4) month
basic salary for every year of their respective government services or the nearest equivalent fraction
thereof favorable to them on the basis of the highest salary which they respectively received in the
course of their employment in the government: provided, that in no case shall the benefit to be paid
to any appointive official or employee be less than Ten thousand pesos (P10,000): provided, further,
that any appointive official or employee who has previously been found guilty in an administrative
proceeding and whose rank or salary has been reduced shall be paid on the basis of his last salary.

Section 4. Additional Benefits. - In addition to the benefits herein authorized, covered appointive
officials and employees who retire or voluntarily elect to be separated from the service under this Act
shall be entitled to the return of GSIS personal contributions pertaining to retirement only and the
payment of the corresponding share of the government with interest earned pursuant to existing
rules and regulations of the Government Service Insurance System. They shall likewise be entitled
to the commutation of unused vacation and sick leaves in accordance with existing rules and
regulations: provided, however, that should the government agency concerned lack the necessary
funds for this, the same shall come from the appropriation to fund this Act: provided, further, that
those who retire after rendering government service for thirty-one (31) years or more and avail
themselves of the incentive benefits provided under this Act shall be entitled to an additional ten
percent (10%) of the amount corresponding to what they will receive from the thirty-first year onward.

Section 5. Exclusiveness of Benefits. - An appointive official or employee who retires or elects to

be separated from the service under this Act shall not be eligible for optional retirement with gratuity
under Republic Act Nos. 1616 and 4968 or with pension under Commonwealth Act. No. 186, as
amended by Republic Act No. 660, or under Presidential Decree No. 1146, as amended, or vice-
versa.

Section 6. Abolition of Positions. - The positions vacated through the early retirement or
separation of its incumbent shall be abolished unless the head of the office or agency, with the
approval of the President in the case of the Executive Department, the Chief Justice in the case of
the Judiciary, the Senate President or the Speaker of the House of Representatives in the case of
Congress, the Chairman in the case of the Constitutional Commissions, certifies within the period of
sixty (60) days from the time of approval or acceptance of the application for retirement or separation
that the exigencies of the service require its retention.

Section 7. Discretion of Agency Heads in Acceptance of Application for Early Retirement and
Voluntary Separation. - No appointive official or employee shall be separated or retired under this
Act unless his application for early retirement or voluntary separation shall have been accepted by
the head of the government office or agency or by the chief executive officer of the government-
owned or controlled corporation concerned as the case may be.
For purposes of this Act, "head of government office or agency" refers to the Secretary in the case of
bureaus, divisions and other offices under a department; governor or mayor, as the case may be, in
the case of local government units; the Chief of Justice in the case of the employees of the Judiciary;
the Senate President or the Speaker of the House of Representatives, as the case may be, in the
case of employees of the Legislature; the Chairman in the case of the Constitutional Commissions;
and in the case of other offices not within the authority of those previously mentioned, their overall
superior.

The application for early retirement or voluntary separation shall be accepted unless the services of
the applicant shall be deemed necessary. The application of those with pending administrative cases
punishable by dismissal or removal shall be held in abeyance until the final disposition of such cases
without prejudice to their receiving benefits under this law in case of acquittal.

The applications of those with criminal cases of grave nature committed in relation to their office
shall be held in abeyance.

Section 8. Restriction on the Employment and Replacement of Retired or Separated

Personnel. - Appointive officials and employees who are retired or separated under this Act shall
not be eligible for appointment to, or employment in any branch, division, instrumentality or agency
of the government, including government-owned or controlled corporations with original charters
whether on a permanent, temporary, casual or emergency status within a period of five (5) years
after separation unless they refund the benefits they received: provided, however, that those
reemployed in the government shall be treated as new entrants insofar as GSIS coverage is
concerned.

Positions vacated but retained shall be filled by personnel chosen from among the most deserving
employees in the agency concerned or from any other agency.

Section 9. Period of Applicability and Effectivity of the Incentive Benefits. - Applications for
early retirement and voluntary separation benefits hereunder shall be entertained only if filed within a
period of two (2) months from the issuance of the rules and regulations for the implementation of this
Act pursuant to Section 13 hereof. The oldest employees who are the most senior in the service will
be given priority in the payment of benefits.

Section 10. Funding. - For national government employees, the sum of Three billion pesos, or so
much thereof as may be necessary, is hereby authorized to be appropriated out of any funds in the
National Treasury not otherwise appropriated for payment of early retirement and separation
incentive benefits authorized in this Act.

For employees of government-owned or controlled corporations, the benefits herein granted shall be
paid from the internal funds of the respective corporations.n no case shall the benefits paid to
employees of government-owned or controlled corporations be less than the benefits granted by
their existing corporate programs, if any.

For employees of local government units, the benefits shall be paid from available funds of each
local government unit.

Government-owned or controlled corporations and local government units which may not be able to
adequately fund the incentive benefits under this Act may avail themselves of the Three billion peso
fund appropriation for this purpose but only to the extent of twenty-five percent (25%) of the
requirements on the condition that their plantilla and staffing pattern shall, for a period of one (1)
year from the effectivity of this Act, be subject to approval of the Department of Budget and
Management: provided, that in the case of government-owned or controlled corporations, said
twenty-five percent (25%) may be deducted by the Department of Budget and Management from
whatever budgetary allocation and assistance they may get from the National Government in the
future.

The above provisions notwithstanding, all savings accruing from the abolition of positions pursuant
hereto shall be earmarked and used exclusively for the payment of the benefits under this Act.

Section 11. Retroactive Charges. - Officials and employees who were previously separated from
the government service not for cause but as a result of the reorganization pursuant to various
executive orders authorizing government reorganization issued after the ratification of the 1987
Constitution shall be deemed covered and entitled to avail of the incentive benefits under this Act.

Section 12. Penalties. - Any government official who compels an employee under any guise
whatsoever to retire or be separated from government service by virtue of this Act or otherwise
violates provisions hereof shall, upon conviction, be punished by a fine not exceeding One thousand
pesos (P1,000), or by imprisonment not exceeding six (6) months or both such fine and
imprisonment in the discretion of the court.

Section 13. Implementing Rules and Regulations. - The implementing rules and regulations shall
be issued within fifteen (15) days from the date of effectivity of this Act by the Department of Budget
and Management, in consultation with the Civil Service Commission: provided, that any provision of
law to the contrary notwithstanding, the only documents or supporting papers to be submitted by
appointive officials and employees who wish to avail themselves of the benefits under this Act are
the following:

(a) A duly approved application under oath for early retirement or voluntary separation in
accordance with this Act, including a statement of the number of years of service in the
government and the rate of the highest salary received.

(b) Money and property clearance from the agency concerned where proper pursuant to
Section 7 hereof; and

(c) A simplified statement of assets and liabilities, net worth, and financial and business
interests in the case of regular employees: provided, further, that the processing and actual
payment of benefits to the appointive officials and employees concerned shall be completed
within fifteen (15) days from the date of submission of all the foregoing documents.

Section 14. Compliance and Reporting. - Six (6) months from the effectivity of this Act, the
Department of Budget and Management and the Civil Service Commission shall, on the basis of the
reports of the various heads of government offices and agencies, render a report to Congress on the
number of government employees affected, the type or nature of positions involved, the total amount
spent and an evaluation thereof.

Section 15. Repealing Clause. - All laws, rules and regulations or parts thereof, inconsistent with
the provisions of this Act are hereby repealed or modified accordingly.

Section 16. Separability Clause. - If any part, section or provision of this Act shall be held invalid or
unconstitutional, no other part section or provision thereof shall be affected thereby.
Section 17. Effectivity. - This Act shall take effect upon publication in two (2) newspapers of
general circulation.

Approved: December 2, 1988

(https://lawphil.net/statutes/repacts/ra1988/ra_6683_1988.html)