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Retirement Pay Calculator

Compute the minimum retirement pay under RA 7641: 22.5 days per year of service, with the age and 5-year checks.

Enter your latest salary, your birthday and your work dates. The default is a worker retiring at 60 after almost 15 years, on ₱20,000 a month.

PHP

Use the same divisor your payroll uses for your daily rate.

Results update as you edit. This is the legal minimum when your company has no better retirement plan.

Minimum retirement pay

₱259,615.38

₱769.23 a day × 22.5 days × 15 years of service.

You qualify for optional retirement: 60 years old with 14 full years of service.

Age on retirement date
60
Length of service
14 years, 9 months, 15 days
Years counted
15 (6+ months rounds up)
½ month salary (22.5 days)
₱17,307.69

What the 22.5 days include

  • 15 days of salary₱173,076.92
  • 5 days of service incentive leave₱57,692.31
  • 2.5 days (1/12 of 13th month pay)₱28,846.15

Quick answer

How is retirement pay computed in the Philippines?

Per year of service

22.5 days

15 days + 5 days SIL + 2.5 days 13th month

Optional retirement

60 to 65

With at least 5 years of service

Compulsory retirement

65

Mine workers may retire from 50

Retirement pay = daily rate × 22.5 days × years of service. With the daily rate at monthly salary ÷ 26:

Minimum retirement pay by monthly salary and years of service
Years of service₱15,000 a month₱20,000 a month₱30,000 a month₱50,000 a month
5₱64,903.85₱86,538.46₱129,807.69₱216,346.15
10₱129,807.69₱173,076.92₱259,615.38₱432,692.31
15₱194,711.54₱259,615.38₱389,423.08₱649,038.46
20₱259,615.38₱346,153.85₱519,230.77₱865,384.62
25₱324,519.23₱432,692.31₱649,038.46₱1,081,730.77
30₱389,423.08₱519,230.77₱778,846.15₱1,298,076.92

Retiring soon? Know your minimum

You've given a company 15, 20, maybe 30 years. When you retire, you want to know what you're owed, and many people are surprised to learn that "half a month per year" doesn't mean half your monthly salary. Under the law, half a month is 22.5 days of pay, not 15. That difference is half again as much, and it's often where computations go wrong.

This calculator checks if you qualify, counts your years with the 6-month rule, and computes the minimum retirement pay under RA 7641. If your company has a retirement plan, compare it with this number. You should get whichever is higher.

How to use the calculator

Step 1

Enter your latest pay

Enter your latest monthly salary or daily rate. For a monthly salary, choose how your payroll gets your daily rate. ÷ 26 is the most common, and it's what the Supreme Court used in Serrano v. Severino Santos Transit.

Step 2

Enter your dates

Your date of birth, the day you started, and the day you'll retire. The calculator works out your age and your years of service from them.

Step 3

Check eligibility and the amount

The result tells you if you qualify, and if not, when you will. It also shows how the 22.5 days break down.

Who can retire under RA 7641

  • Optional retirement: at 60 or older, but not beyond 65, with at least 5 years of service with the same employer.
  • Compulsory retirement: at 65. You still get retirement pay if you have at least 5 years of service.
  • Mine workers: underground and surface mine workers can retire as early as 50, under RA 8558 and RA 10757.
  • Not covered: government employees, and workers in retail, service and agricultural businesses that regularly employ no more than 10 workers.

RA 7641 is the minimum. If your company has a retirement plan, a CBA or an employment contract that gives more, that applies. If it gives less, you're owed at least what the law gives.

Why half a month is 22.5 days

½ month salary = 15 days of salary + 5 days of SIL + 2.5 days (1/12 of 13th month)

= 22.5 days × daily rate

Retirement pay = 22.5 × daily rate × years of service

The law expanded "one-half month salary" to include the cash value of your 5 days of service incentive leave and one-twelfth of your 13th month pay. One-twelfth of a 30-day month is 2.5 days. The daily rate is your latest basic rate. COLA isn't included.

A fraction of at least 6 months counts as one whole year. But the 5 years needed to qualify are actual years: 4 years and 7 months counts as 5 for the computation, but doesn't meet the 5-year requirement.

Example: retiring at 60 after almost 15 years

Let's say you were born on March 15, 1967, started on June 1, 2012, and retire on your 60th birthday, March 15, 2027. Your monthly salary is ₱20,000. You've worked 14 years, 9 months and 15 days, which counts as 15 years.

Daily rate = ₱20,000 ÷ 26 = ₱769.23

½ month salary = ₱769.23 × 22.5 = ₱17,307.69

Retirement pay = ₱17,307.69 × 15 = ₱259,615.38

If your employer only paid 15 days per year, you'd get ₱173,076.92, about ₱86,500 less. And if your payroll uses ÷ 30 for the daily rate, the minimum becomes ₱225,000, so ask which divisor applies to you.

Is retirement pay taxed?

Retirement pay under RA 7641 is excluded from gross income under Section 32(B)(6)(a) of the Tax Code. Retirement pay from a company plan is tax-exempt if it's a reasonable private benefit plan, you're at least 50 years old with at least 10 years of service with the employer, and it's your first time to get this exemption.

Your final pay when you retire, meaning your last salary, prorated 13th month and leave conversion, is separate from retirement pay. The Final Pay Calculator covers those.

Questions about retirement pay

How do I compute retirement pay in the Philippines?

Multiply your daily rate by 22.5 days, then by your years of service. A fraction of at least 6 months counts as a full year. On ₱20,000 a month (÷ 26), 15 years gives ₱259,615.38.

Why is half a month 22.5 days and not 15?

RA 7641 defines one-half month salary as 15 days of salary, plus the cash value of 5 days of service incentive leave, plus one-twelfth of the 13th month pay, which is 2.5 days. Together, that is 22.5 days.

Who is entitled to retirement pay?

Private sector employees who retire at 60 to 65 with at least 5 years of service, or at the compulsory age of 65, when there is no retirement plan that gives more. Small retail, service and agricultural businesses with no more than 10 workers are exempt.

Can I retire before 60 and still get retirement pay?

Not under RA 7641, unless you are a mine worker, who can retire at 50. Your company plan, contract or CBA may allow earlier retirement with its own benefits.

What daily rate is used for retirement pay?

Your latest basic salary rate. For monthly-paid employees, it is usually the monthly salary ÷ 26, as used by the Supreme Court in Serrano v. Severino Santos Transit, but some employers use other divisors. COLA is not included.

Is retirement pay taxable?

Retirement pay under RA 7641 is excluded from gross income under Section 32(B)(6)(a) of the Tax Code. Company plan benefits are exempt if the plan is reasonable, you are at least 50 with 10 years of service, and it is your first time using the exemption.

Do I get both separation pay and retirement pay?

It depends on your retirement plan or CBA. If you are let go for an authorized cause and also qualify for retirement under a company plan, the Supreme Court has allowed both unless the plan or agreement says you can only get one.

Sources

  • Republic Act No. 7641 (Retirement Pay Law), Labor Code Article 302 (formerly 287), and its implementing rules
  • DOLE Bureau of Working Conditions, Handbook on Workers' Statutory Monetary Benefits: 22.5 days; COLA excluded
  • Serrano v. Severino Santos Transit, G.R. No. 187698, August 9, 2010: 22.5 days; daily rate from monthly earnings ÷ 26
  • Republic Act No. 8558 and Republic Act No. 10757: retirement age for mine workers
  • National Internal Revenue Code, Section 32(B)(6)(a)