SSS north Luzon head denies overcharging salary loans

By Maria Aprila Cruz

BAGUIO CITY – The Social Security System (SSS) has denied reports that it had overcharged its member-borrowers who availed of salary loans.

Luis Olais, Assistant Vice President for North Luzon, told a radio interview that there is no truth about a news report that SSS had overcharged its member-borrowers who availed of salary loans.

According to Olais, the issue on overcharging came out because of a finding of the Commission on Audit (COA) that SSS did not follow a prescribed implementation in accordance with the Bangko Sentral ng Pilipinas (BSP).

He explained that the computation which the SSS uses to calculate the interests on loans is based on a policy that was approved by the Social Security Commission (SSC) in the year 2000 wherein the 10% interest per annum being charged by SSS is being deducted in advance.

“If a member applies for a maximum loan of P24,000 the 10% interest for the first year which is equivalent to P2,400 is being deducted upon the release of the loan, while the second  year interest is being deducted with the monthly amortization, so actually if u see there is no overcharging because we based our interest charges for one year based on the commission resolution and not on the prescribed rule of BSP”, he explained.

COA said the 10 percent interest on the loans that SSS made to its members must be based on the diminishing monthly loan balance, not on the principal loan amount, Olais added.

So in accordance now with the COA findings or the BSP, Olais said that SSS has revised its salary loan granting in order to conform to whatever ruling of the concerned agency.

Under the revised scheme which  will be implemented soon, amortizations for short-term member loans will be computed by charging the interest on the outstanding balance of the loan at the beginning of each installment period. The 10 % effective annual interest of the loan will be charged based on diminishing principal balance and it will be amortized over 24 months, he said.

Olais said that the effect of the revised scheme would be a higher take home loan, however he appealed to all SSS borrowers to pay regularly as prescribed in the amortization period to avoid penalty. 

The new scheme Olais said will also result in the increase in maximum loanable amount of P30,000  from the present P24,000 limit provided a member is qualified to avail.