Law Summary
Automatic and Optional Retirement Age
- Compulsory retirement at age 65.
- Optional retirement at age 63 subject to conditions:
- Lump sum payment of present value of annuity for first 5 years.
- Future annuity paid monthly.
- Same benefits as compulsory retirement if 15 years of service completed.
- Must not have separation in last 3 years unless disability retirement.
- Continuation allowed if eligibility not met.
- Excludes judiciary and constitutional officers.
- Employers must notify employees of retirement date 60 days in advance.
Administration of the System
- System is a non-stock corporation headquartered in Manila or Quezon City.
- Managed by a Board of Trustees:
- General Manager and four members appointed by President with Commission on Appointments consent.
- Chairman and Vice-Chairman elected among trustees.
- Trustees serve 3-year terms, exceptions for initial appointments.
- Vacancies filled for unexpired terms.
- Trustees receive P25/day for attendance.
Loan Provisions on Real Estate
- Loans granted as first liens on improved, unencumbered real estate with registered title.
- Maximum loan: 60% of fair appraised value.
- Total loans on real estate limited to 70% of total assets.
- Loan repayment period not exceeding 10 years, renewable for another 10 years.
- Terms and conditions prescribed by the Board.
Abolition and Consolidation of Retirement Plans
- Previous retirement/pension plans for local government and government-owned corporations declared abolished.
- Rights of retirees under old plans preserved.
- Present value of benefits under old plans credited to the System’s fund by employers.
- Members desiring to retire under this Act must notify System by December 31, 1962.
- Election to retire under Act precludes receiving benefits under prior plans.
- Protection for members whose positions are abolished or who die/become disabled before eligibility.
- Contributions refundable upon resignation after 20 years service.
Regulation of Retirement and Insurance Plans
- Creation of new retirement or insurance plans require prior System approval.
- Employer gratuity/benefits capped at one month’s salary per year of service, max two years total.
- No gratuity or benefit by employer to those covered by this Act’s retirement benefit.
Effectivity
- Act takes effect upon approval on June 17, 1961.