What happens when employees reach the retirement age in the Philippines?

In the Philippines, the compulsory retirement age for private sector employees is generally 65 years old, as stated under Republic Act No. 7641 (The Retirement Pay Law). When an employee reaches this age, there are specific contribution, tax, and employer compliance implications to consider.

Can Employees Continue Working Beyond Age 65?

Yes. While age 65 is considered the compulsory retirement age under the law, it does not mean employees are legally required to stop working.

Continued employment after age 65 is allowed if both the employer and employee agree.
This is often formalized through a new employment contract, usually on a term-based or project-based arrangement.
The law’s retirement age provision mainly guarantees the right to retirement benefits, not mandatory termination.

However, if the company has a policy, employment agreement, or collective bargaining agreement (CBA) that requires retirement at 65, that policy must be followed—unless both parties agree otherwise.

SSS Contributions

Employees typically stop contributing to the Social Security System (SSS) when they begin receiving their SSS pension.

If the employee starts receiving their SSS retirement benefit at 65, SSS contributions should stop.
If they continue working and have not claimed their pension, SSS contributions may continue.

PhilHealth Contributions

An employee may stop contributing to PhilHealth at age 65 if they have reached lifetime membership status, which requires at least 120 monthly contributions.

If the employee has not completed 120 contributions, they must continue contributing until they qualify.

Pag-IBIG Contributions

There is no age limit for Pag-IBIG Fund (HDMF) contributions.

Employees may continue contributing beyond 65 unless they choose to claim their Pag-IBIG savings.
Once claimed, no further contributions are necessary.

Income Tax

If an employee continues working after age 65, their regular salary remains subject to income tax and withholding taxes.

There is no automatic tax exemption based on age alone.

Retirement Pay

Employees reaching age 65 are entitled to retirement pay if they have served at least 5 years and are covered under RA 7641 or a more favorable company retirement plan.

Retirement pay is tax-exempt if provided according to legal or plan-based guidelines.
Employers should determine which option (RA 7641 or the company plan) is more beneficial to the employee.

Employer Obligations

When an employee reaches the retirement age, employers must:

Update HR and payroll records to reflect the employee’s retirement status
Stop SSS and PhilHealth contributions, where applicable
Coordinate with the employee regarding their retirement benefit claims and decision to continue working, if any
Ensure compliance with retirement pay rules under RA 7641 or the applicable retirement plan

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Philippines