The distribution of retirement benefits following the death of an employee or retiree is a critical aspect of Philippine labor and civil law. These benefits, often representing a lifetime of labor, are designed to provide financial security for the decedent's immediate family. In the Philippines, the rules governing this distribution depend on whether the decedent was from the private sector or the public sector, and whether the benefits fall under social security systems or private company policies.
1. Social Security System (SSS) – Private Sector
For employees in the private sector, the Social Security Law (Republic Act No. 11199) dictates the hierarchy of beneficiaries.
Primary Beneficiaries: The legal spouse (until they remarry) and the dependent children (legitimate, legitimated, legally adopted, or illegitimate).
The Sharing Scheme: * The legal spouse is entitled to the Primary Pension.
The dependent children (maximum of five, starting from the youngest) are entitled to a Dependents' Pension equivalent to 10% of the maximum monthly pension or ₱250.00, whichever is higher.
Illegitimate Children: Under the law, illegitimate children are entitled to 50% of the share of a legitimate child. However, if there are no legitimate children, they may receive the full dependents' share.
Disqualification: A spouse who has contracted a subsequent marriage or is proven to have been cohabiting with another person loses the right to the SSS survivor's pension.
2. Government Service Insurance System (GSIS) – Public Sector
For government employees, Republic Act No. 8291 governs the distribution of funeral, death, and survivorship benefits.
Primary Beneficiaries: The legal spouse and the dependent children.
The Survivorship Pension:
The legal spouse receives 50% of the Basic Monthly Pension (BMP).
Dependent children receive a "Children’s Benefit" equivalent to 10% of the BMP for each child (not exceeding five).
Specific Conditions: The spouse remains a beneficiary only if they were living with the decedent at the time of death and have not remarried or entered into a common-law relationship. Dependency of children usually ends at age 21, unless they are incapacitated.
3. Private Retirement Plans (Company Policy)
Many private corporations offer separate retirement funds (e.g., Provident Funds). The distribution of these follows the terms of the Retirement Plan Agreement.
- Designated Beneficiaries: Most plans allow the employee to designate specific beneficiaries. If a spouse and children are named, the company follows the specified percentages.
- Absence of Designation: If no beneficiary is named, the funds generally fall into the Estate of the Deceased. In this scenario, the Civil Code of the Philippines on intestate succession applies.
4. The Civil Code and Intestate Succession
When retirement benefits are not governed by specific social security laws (such as a lump-sum payout that has already entered the decedent’s bank account), they are treated as part of the inheritance.
Under the Civil Code (Articles 887-900), the legal spouse and children are "compulsory heirs."
| Heir Category | Sharing Ratio (Intestate) |
|---|---|
| One Legitimate Child & Spouse | They share the estate in equal halves (1/2 each). |
| Multiple Legitimate Children & Spouse | The spouse gets a share equal to that of each legitimate child. |
| Illegitimate Children | Each illegitimate child receives 1/2 of the share of one legitimate child. |
Note: The "Legal Spouse" refers strictly to a person bound to the decedent by a valid marriage. Common-law partners (live-in partners) are generally not recognized as legal heirs or primary beneficiaries under SSS/GSIS laws, regardless of the length of the relationship.
5. Jurisprudential Guidelines and Dispute Resolution
The Philippine Supreme Court has consistently ruled on cases involving competing claims between a legal spouse and a common-law partner (the "second family").
- Validity of Marriage: The SSS and GSIS will only recognize the spouse whose marriage is supported by a valid Marriage Certificate from the Philippine Statistics Authority (PSA). If a marriage was bigamous, the second "spouse" is disqualified, and the benefits revert to the first legal spouse or the children.
- The "Dependency" Requirement: For children to claim, they must generally be below 21 years old, unmarried, and not gainfully employed, or over 21 but physically/mentally incapacitated.
6. Summary of Key Requirements for Claimants
To facilitate the distribution, the following documents are typically required by Philippine agencies:
- Death Certificate (PSA Authenticated).
- Marriage Contract (to prove the status of the spouse).
- Birth Certificates of Children (to prove filiation).
- Affidavit of Surviving Heirs (a sworn statement identifying all legal claimants).
- Affidavit of Non-Remarriage (for the surviving spouse).
Failure to provide these documents or the presence of conflicting claims often leads to the "holding" of benefits until a court determines the rightful heirs through a Petition for Settlement of Estate.