Retirement pay calculator under RA 7641

How it is worked out

RA 7641 says a qualifying employee gets “at least one-half (1/2) month salary for every year of service”. The law then defines one-half month salary as “fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves”.

The DOLE Handbook (2024 edition) turns that into days:

Scroll the table sideways for more

So the formula, in the Handbook’s words, is: minimum retirement pay = daily rate x 22.5 days x number of years of service.

To get a daily rate from a monthly salary, the calculator multiplies the salary by 12 and divides by the number of paid days in a year. Neither the law nor the Handbook’s retirement chapter fixes that number. The calculator offers the three factors DOLE uses elsewhere in the Handbook: 365 for workers paid for every day of the year, which DOLE uses for monthly-paid employees; 313 for those not paid on rest days; and 261 for those not paid on Saturdays and Sundays. Ask your employer which they use, since the choice changes the result.

“Salary” here means basic salary. The Handbook says COLA is not included, and cites a Supreme Court case saying allowances are left out unless your employer or your CBA agrees to include them.

Who qualifies

All of these must be true (RA 7641, and the DOLE Handbook 2024):

• Age: 60 or older when you retire. 65 is the compulsory retirement age.
• Service: at least 5 years with the same employer.
• Employer: a private employer. Government workers are covered by GSIS instead. Retail, service and agricultural businesses with not more than ten workers are exempt.
• No better plan: the law sets the minimum where the employer has no retirement plan or agreement. If there is a plan, contract or CBA, it may give more but not less. The Handbook says that if a plan gives less, the employer pays the difference.

Special ages apply to mine workers and licensed racehorse jockeys. Underground mine workers, and surface mine workers in mill plants, electrical, mechanical and tailings pond work, may retire from 50 and must retire at 60 (RA 10757). Jockeys retire at 55, as the Handbook explains. This calculator uses the general rule.

Part years

The law counts “a fraction of at least six (6) months” as one whole year. So 12 years and 7 months counts as 13 years, and 12 years and 5 months counts as 12.

The rounding only applies to working out the pay. To qualify at all, the law says you must have “served at least five (5) years” with the employer, so 4 years and 6 months is not enough.

Tax on retirement pay

Retirement pay is normally taxed as compensation. Two exceptions matter here:

• RA 7641 pay with no company plan: the Tax Code excludes “retirement benefits received under Republic Act No. 7641” from gross income (Sec. 32(B)(6)(a)). BIR RMC 13-2024 says this applies if you are 60 to 65, have served the employer for at least 5 years, and have not used a retirement tax exemption before. It adds that no BIR certificate is needed, and that pay received on retiring after 65 is also exempt if you were not already paid retirement benefits at 65.
• Pay from a company plan: BIR RMC 5-2025 says employees covered by an employer’s retirement plan or a CBA cannot use the RA 7641 exemption. Their pay is tax-free only if the plan is one the BIR finds reasonable, and they are at least 50 with at least 10 years of service, and have not used the exemption before (RR 15-2025).

Worked example

A worker earns a basic salary of PHP 30,000 a month, paid for every day of the year. She retires at 62 after 12 years and 7 months with the same employer, which has no retirement plan.

Daily rate (30,000 x 12 / 365)

PHP 986.30

15 days' salary

PHP 14,794.52

5 days of service incentive leave

PHP 4,931.51

2.5 days (13th month share)

PHP 2,465.75

One-half month salary (22.5 days)

PHP 22,191.78

Years counted (12 years 7 months)

13

Minimum retirement pay

PHP 288,493.15

With 12 years and 5 months instead, the years counted would be 12 and the minimum PHP 266,301.37.

Limits of this estimate

• It gives the law’s minimum. Your employer, contract or CBA may pay more, or count more items as salary.
• It does not add your proportionate 13th month pay for the year you retire or cash for unused leave. The Handbook says you are owed both on retirement, separately.
• It does not cover OFWs paid by foreign employers. Their end-of-service pay follows the law of the country they work in.
• SSS benefits are separate from retirement pay, as the Handbook notes.
• As of 20 October 2026, DOLE does not publish an online retirement pay calculator, so there is no official tool to link. Your employer’s HR office or DOLE can confirm your figure.

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• Retirement age in the Philippines, rule by rule
• Planning your retirement in the Philippines as an OFW
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