Retirement Plan & Benefits 102

By: CelynPhD-I

Saint Paul University PhilippinesSummer 2010

Report in Human Resource and Management

Video clip

What is Retirement? it has been thought

of as the end in person’s career,

retirement from a particular employing organization and is seen more as a transition than as an end point

What is Retirement Benefit ?• It is a cash benefit paid to a member who can no longer work due to old age.

TRANSITION:

A point at which a person goes through a career shift of some sort

A point at which the person’s work and other activities change a course

2 transitions:

Retirement from the organization

Has reached the

contractually agreed-

upon age and/ or

length of service at which, he is permitted to exit and receive retirement benefitsHe may still find and be hired in a new job

Retirement from work

Cessation from paid employment

2 transitions:

FACTORS AFFECTING THE DECISION TO RETIRE FROM EMPLOYMENT

FACTORS THAT TEND TO DELAY RETIREMENT

• Retirement Age• Poor Health

• Positive View of Retirement

• Opportunity for 2nd Career

• Job Dissatisfaction• Increased Job/ Career

Pressures• Adequate Pension and

other income• Cost of Living Indexing

of Retirement Benefits

FACTORS THAT TEND TO ACCELERATE RETIREMENT

• Retirement Age • Good Health• Feeling that

Retirement is Depressing

• Fear of Aging and Death

• Job Satisfaction• Work Ethic

• Economic Necessity• Fear of Inflation

Reti

rem

en

t S

tyle

s1. Reorganizer• People for whom employment

retirement is a transition from one type of active life to another. Voluntary Activities, community organizational activities occupy their time.

• Their health is good, they plan ahead, and they tend to be in good financial condition.

• Active group, in good health, who

continue working after retirement, in another job.

• Many feel that they need to work to earn money.

1. Holding on

Reti

rem

en

t S

tyle

s

3. Rocking Chair• stereotyped view of

retired people.

• Reduced level of activity, tend to retire “ on time” and move gracefully into a

slower-paced life

• Dissatisfied• They tend to have poor

health and low incomes, and

are inactive and apathetic

Reti

rem

en

t S

tyle

s

SHOULD I RETIRE ???

“The trouble with retirement is that you

never get a day off. ” ~Abe Lemons

Retirement planning is an

ongoing,

lifelong process that takes decades of commitment in order to

receive the final payoff.

Retirement Planning

Filling ones nest egg

Preparation forone’s goldenyears

It is a

long preparation for. Personal life. Financial life. Emotional life . Spiritual life after separation from work and organization

Guide Questions:Why should I Plan for Retirement?How much do I need?Where will my money come from?Shall I buy other Retirement Plans?Where will I spend my retirement days?With whom will I spend my days?Will I be happy?

•A bittersweet experience

Social Security

US Federal Programs

Federal Employee Retirement System

Employer Sponsored Programs

Defined Contribution Plans

Defined Benefit Plans

Qualified Plans

Providers of Retirement Benefits in the Philippines

Private institutions

AMWSLAI

• Social Security is part of the

Retirement Plan of almost every American worker.

Social Security Act of 1935

Typesunemployment insurance, retirement income, benefits for dependents,medical insurance

Social Security Act of 1935

•Workers who have paid into the system and were born before 1938 get full Social Security benefits at age 65 Workers can begin to get benefits as early as age 62, but at that age retirees get reduced benefits because they will draw a pension for more years.

•

Who Gets Social Security?

•A person born after 1929 must have at least 40 quarters of earnings to get benefits.

•The program indexes a person’s earnings and gives greater weight to people with low incomes. This provides the poorest people with proportionately higher benefits.

Who Gets Social Security?

•How do you

qualify for retirement benefits?

•Pay Social Security taxes, you earn “credits” toward Social Security benefits.

• No retirement benefits can be paid until you have the required number of credits.

a retirement plan that provides benefits from three different sourcesBasic Benefit Plan, Social Security,Thrift Savings Plan

Federal Employee Retirement System

Employer Sponsored Programs

•Qualified plans

Welfare and pension plans that meet various requirements set forth by theEmployee Retirement Income Security Act of 1974

Employer Sponsored Programs•Qualified Retirement Plan

•A plan that meets requirements of the Internal Revenue Code and as a result, is eligible to receive certain tax benefits. These plans must be for the exclusive benefit of employees or their beneficiaries.

KINDS:

1.Defined-Contribution Plan•A retirement plan in which a certain amount

or percentage of money is set aside each year by a company for the benefit of the employee.

Qualified Retirement Plan

2. Defined-Benefit Plan•An employer-sponsored retirement plan where employee benefits are sorted out based on a formula using factors such as salary history and duration of employment.

Qualified Retirement Plan

When I retire, from what retirement program will I avail my pension?

GSIS Retirement Programs

1. Retirement Under RA 8291

Five-year lump sum or cash payment with instant pension—choose your personal reward.

To qualify :1. The retiree must have rendered at least 15 years of service and must be at least 60 years of age upon retirement. 1.He /she must not be a permanent total disability pensioner.

2. Retirement under Republic Act 660

Also called “Magic 87,” this option provides both annuity and lifetime pension.

To qualify :

1.be in government

service on or before May 31, 1977

2.has rendered at least

20 years of service regardless of age and employment status

3.His/her last 3 years of service prior to retirement must be continuous

3. Retirement under Republic Act 1616

Refund your GSIS premiums with this “take-all” option at the same time get gratuity payment from your employer.

• With the help of RA 7699, otherwise known as the Portability Law, government retirees who do not meet the required number of years provided under PD 1146 and RA 8291 can still avail of retirement and other benefits.

4. Portability Law (RA 7699)

Combine your GSIS and SSS creditable years of service to qualify for retirement program offered by both pension funds.

• To qualify:

•Only those who have been in government service after

• May 31, 1977 but before

• June 24, 1997 can avail of this retirement program.

5. Retirement under Presidential Decree 1146

Retirement under PD 1146 gives you a choice between a Basic Monthly Pension (BMP) and Cash Payment.

60 years old and unemployed

paid at least 120 monthly contributions prior to the semester of retirement. OR

65 years old, whether employed or not

paid 120 monthly contributions

Who may

qualify for a retirement benefit?

ssS Retirement Programs

the monthly pension, and

the lump sum amount.

What are the

types

of retirement benefits?

• The monthly pension will be the highest of:

• 1. the sum of P300 plus 20 per cent of the average monthly salary credit plus 2 % of the average monthly salary credit for each credited year of service in excess of 10 years; or

• 2. 40 per cent of the average monthly salary credit; or

• 3. P1,200, provided, that the monthly pension is paid for not less than 60 months.

How much monthly pension will a retiree receive?

•A retiree has the option to receive his first 18 monthly pensions in lump sum discounted at a preferential rate of interest to be determined by the SSS.

•=employee contributions + employer contributions + plus interest

lump sum

• The monthly pension of a retirement pensioner who resumes employment and is less than 65 years old will be

suspended. He

and his employer will again be subject to compulsory coverage.

What happens when the retirement pensioner resumes employment?

Retirement, whether we will like it or not, is a reality that it will soon come and that we have to

embrace it

Afterall . . .

“ When you retire, you switch bosses -

from the one who hired you to the one

who married you. ” ~Gene Perret

THANK YOU,

Mabbalo

References

Martocchio, Joseph J. (2006). Employee Benefits: A primer for human resource professionals (2nd ed.). New York, NY: McGraw-Hill/IrwinCitation:

Novak, Mark W. (2006). Issues in Aging. Boston, MA: Allyn and Bacon - Pearson Education, Inc.

 Investopedia. (2010). Defined-Benefit Plan. Retrieved from http://www.investopedia.com/terms/d/definedbenefitpensionplan.asp

United States Department of Labor. (2010). Retirement Plans, Benefits and Savings. Retrieved from http://www.dol.gov/dol/topic/retirement/typesofplans.htm