A sigh of relief at the tolerance of the SSS loan penalty

Last call for members-borrowers of the Social Security System (SSS)!

As a pandemic relief measure for SSS members, those who had qualifying loans were allowed to benefit from the Member Short-Term Loan Penalty Forbearance Program between November 15, 2021 and February 14. 2022. Borrowing members therefore only have a few days to comply with the grace period.

According to the guidelines set out in SSS Circular No. 2021-14, a short-term loan is eligible for the program if the loan has been in arrears for at least six months, starting on the first day of the grace period, November 15. -term loans include payroll loans, disaster loans, those under the early renewal payroll loan program, emergency loans and loans restructured under the loan restructuring program put in place. works in 2016 and 2019.

The Forgiveness Program allows member-borrowers to settle their delinquent loans on much lighter payment terms. All principal and unpaid interest components of the loans are consolidated into a new consolidated “Restructured Loan 1” or “Restructured Loan 2”. Payment can be in one go or in several instalments.

The one-time payment is due in full within 30 days of receipt of the penalty forgiveness request approval. For those choosing to pay by installments, a 50% deposit is required within 30 days of receipt of application approval, with the remaining 50% payable in six equal monthly installments.

Like any other loan, installment payments are subject to an interest rate of 3% per annum calculated on a decreasing principal balance over the six months. Late payments are subject to a penalty of 1% per month.

The balance of the restructured loan should be nil at the end of the term; otherwise, any outstanding balance, including the prorated condemnable penalty, will form part of a new principal under “Restructured Loan 2”. The amended loan terms require payment of the balance immediately as “Restructured Loan 2” is due and payable. In case of non-payment, the loan will be charged an interest of 10% per year until it is fully repaid.

Under the program, penalties are 100% tolerated under the single payment option. For installment terms, 50% of the consolidated penalty is tolerated upon receipt of the 50% down payment, with the remaining 50% penalty to be fully tolerated after full payment of the restructured loan.

Before member-borrowers can take advantage of other short-term loan programs, they should note that “Restructured Loan 1” and/or “Restructured Loan 2” must first be paid in full. Therefore, their payment schedule should be planned accordingly to manage cash flow, balancing the use of cash for essential needs, loan repayments and emergencies.

One of the benefits of the application process is the ease of online filing through the member’s SSS e-account. Loan payment can be made through any SSS branch or online payment channels, such as GCash and PayMaya. While assisting a client, I found my online application experience to be convenient and safe, with no exposure to health risks. In contrast, digital filing requires a reliable internet connection and access to computers, which many Filipinos may not have.

It is always prudent for the member-borrower to keep a copy of the proof of payment for future reference. In the event of failures, such as system problems or unregistered entries, it is the responsibility of the borrowing member to present proof of payment. If the SSS assesses the member-borrower for unpaid loans, the claim may be refuted by presenting proof of payment.

The tolerance program is a welcome step at a time when things are not yet back to normal. Since the objective of the program is to provide relief to cash-strapped members, the SSS could consider giving member-borrowers more time to settle their loans. Such a scheme could involve (a) making the full payment or 50% down payment payable in 60 days instead of 30 days, and (b) making installments payable in 12 equal monthly installments instead of just six months. .

The SSS may also consider extending the program period to May 14, or an additional six months from the start of the program, to allow the qualifying member-borrower more time to take advantage of the relief on offer.

For now, a sigh of relief would be better than no relief at all. I hope qualified member-borrowers will still take the opportunity to settle their loan obligations to avoid additional financial burdens in the form of penalties due to loan default. On behalf of SSS, funds raised through the program will help the agency improve its services and provide much-needed benefits to SSS members.

Any views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general informational purposes only and should not be used as a substitute for advice. specific.

Bernadette R. Fama-Absolor is a manager in the Client Accounting Services group of Isla Lipana & Co., the Philippine member firm of the PwC network.

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