No-AMC Limit
The removal of the average monthly compensation (AMC) Limit seeks to raise your social security protection to its highest, not only in terms of retirement benefits but also in the event of all contingencies, such as sickness, disability, separation from service, and death.
The AMC is your average monthly salary for the last 36 months of service that you rendered. It is the basis for computing your basic monthly pension (BMP), along with your years of service. The removal of the AMC limit was made effective on January 1, 2003.
What are the effects of the removal of the AMC limit?
- If you are receiving a monthly salary of above P16,000, the amount of benefits will be higher. Consequently, your contributions will be adjusted accordingly.
- If you are receiving less than P16,000 monthly, the amount of benefits and contributions is maintained. Should your monthly salary increase and exceed P16,000, your benefits and contributions will be adjusted accordingly.
How does the no-AMC limit policy affect your benefits?
All benefits computed based on your AMC will also increase with the removal of the AMC limit. These benefits include your basic monthly pension, lump sums and cash payments for separation, old-age, retirement, disability, survivorship, and unemployment.
The formula for the BMP and the computation of the benefits under RA 8291 is the same. The only change is the removal of the AMC limit.
Formula for computing the BMP:
BMP = 0.025 x (total years of service) x (AMC + 700)
Note, however, that the resulting figures should not exceed 90% of your AMC.
How much is your BMP under the no-AMC limit scheme?
AMC |
Years of Service |
BASIC MONTHLY PENSION | |||
With AMC Limit (P16,000.00) | No-AMC Limit | Increase | |||
Amount | Percentage | ||||
P 20,000.00 | 15 | P 6,262.50 | P 7,762.50 | P 1,500.00 | 24% |
| 20 | P 8,350.00 | P 10,350.00 | P 2,000.00 | 24% |
| 25 | P 10,437.50 | P 12,937.50 | P 2,500.00 | 24% |
| 30 | P 12,525.00 | P 15,525.00 | P 3,000.00 | 24% |
| 35 | P 14,400.00 | P 18,000.00 | P 3,600.00 | 25% |
| 40 | P 14,400.00 | P 18,000.00 | P 3,600.00 | 25% |
P 25,000.00 | 15 | P 6,262.50 | P 9,637.50 | P 3,375.00 | 54% |
| 20 | P 8,350.00 | P 12,850.00 | P 4,500.00 | 54% |
| 25 | P 10,437.50 | P 16,062.50 | P 5,625.00 | 54% |
| 30 | P 12,525.00 | P 19,275.00 | P 6,750.00 | 54% |
| 35 | P 14,400.00 | P 22,500.00 | P 8,100.00 | 56% |
| 40 | P 14,400.00 | P 22,500.00 | P 8,100.00 | 56% |
P 30,000.00 | 15 | P 6,262.50 | P 11,512.50 | P 5,250.00 | 84% |
| 20 | P 8,350.00 | P 15,350.00 | P 7,000.00 | 84% |
| 25 | P 10,437.50 | P 19,187.50 | P 8,750.00 | 84% |
| 30 | P 12,525.00 | P 23,025.00 | P 10,500.00 | 84% |
| 35 | P 14,400.00 | P 26,862.50 | P 12,462.50 | 87% |
| 40 | P 14,400.00 | P 27,000.00 | P 12,600.00 | 88% |
What is the legal basis for the no-AMC limit policy?
RA 8291 provides that the basis for computation of pension benefit shall be the AMC. (Rule IV, Sec. 4.1 and 4.2).
Furthermore, it authorizes the GSIS Board of Trustees to formulate policies, guidelines, and programs to effectively carry out the purposes of the Act. (Rule XVI, Sec. 16.4.1)
How much is the increase in your monthly contributions?
The absolute increase in your personal contributions is equal to 7% of the difference between your monthly salary and the P16,000 AMC limit.
Your personal contribution is now straight 9% of your basic monthly salary (BMS), while your employer’s contribution remains at 12% of your BMS.
Basic Monthly Salary |
PERSONAL CONTRIBUTIONS | ||
With AMC Limit (P16,000.00) | No-AMC Limit | Increase in Contribution | |
(Amount) | |||
P 16,000.00 | P 1,440.00 | P 1,440.00 | P 0.00 |
P 20,000.00 | P 1,520.00 | P 1,800.00 | P 280.00 |
P 25,000.00 | P 1,620.00 | P 2,250.00 | P 630.00 |
P 30,000.00 | P 1,720.00 | P 2,700.00 | P 980.00 |
Since the GSIS contributions are tax-deductible, the decrease in your net take-home pay is actually lower or around 5% of the difference between your monthly salary and the P16,000 AMC limit.
Basic Monthly Salary |
Assumed Tax Rate | Decrease in Net Take-Home Pay |
P 16,000.00 | 25% | P 0.00 |
P 20,000.00 | 25% | P 210.00 |
P 25,000.00 | 25% | P 472.50 |
P 30,000.00 | 30% | P 686.00 |