CHIZ URGES SSS TO CONDONE LOAN PENALTIES, PREPARE FOR PENSION HIKE
Instead of raising member contributions anew to compensate for the looming hike in the retirement benefits of 1.9 million pensioners, Sen. Francis “Chiz” Escudero urged the Social Security System (SSS) to consider alternative ways of generating revenue like condoning penalties on overdue loan obligations.
According to Escudero, such scheme will not only help the SSS raise additional revenues, but will also aid delinquent borrowers settle their obligation without worrying about the staggering penalties they have incurred.
“The SSS should not rely on additional premium on member contributions to boost its revenue. It should explore other options like a loan penalty condonation program to raise money for the state-run pension fund,” Escudero suggested.
The SSS had claimed that based on the latest actuarial valuation, four years were added to the life of the fund from the previous valuation of 2039, after hiking the rate of contribution in January 2014.
The last time the SSS implemented a loan penalty condonation program in 2012, the state-run pension fund collected a total of P2.878 billion, surpassing its target of P2.432 billion.
The program, which ran from April 2 to Sept. 31, 2012, granted partial to full amnesty on loan penalties to about 208,502 delinquent borrowers who repaid their loans either on installment basis or one-time payment.
Escudero also proposed that aside from implementing a loan penalty condonation program, the SSS should also intensify its information drive about its existing programs aimed at helping members with outstanding loans.
Escudero refers to the option of delinquent borrowers to sell their shares of stocks under the Stock Investment Loan Program (SILP) and the Privatization Fund Loan Program (PFLP) to lessen their outstanding loan balance.
“SSS is supposed to promote social justice through a viable social security system, to help members and their families cope with death, disability, sickness, maternity or old age, and not turn them away through huge amount of penalties,” Escudero said.
The SSS, which has 32.5 million members as of March 2015, is poised to implement a P2,000 across-the-board increase in the retirement pay of 1.9 million pensioners should a bill approved by the House of Representatives and the Senate is signed into law.
Escudero, also has a pending bill seeking to aid the SSS resolve its problem on delinquent contributions and bring relief to affected members and employers.
Senate Bill No. 2921 that Escudero filed in September, seeks to empower the Social Security Commission to condone penalties on delinquent contributions of members who has not only deprived members of their benefits, but has also stunted SSS’ growth.
According to Escudero, the three percent per month penalty assessed on unremitted contributions is “burdensome” for the more than 30 million SSS members.
“This penalty is burdensome as it continues to accrue from the date the contribution falls due until paid. The delinquency, if not quickly addressed, can really pile up. For troubled companies that, by and large, do not want to be delinquent in the first place but failed to remit what is due as their employees’ contributions to SSS could easily find themselves in arrears,” he said.
The condonation of penalties would also benefit the SSS, as it could immediately collect overdue contributions amounting to P625.9 million as of last year, based on the records of the Large Account Division of SSS.
SSS records show that 24,042 delinquent employers owe the SSS P1.033 billion in delinquent contributions as of May 2014, including P408 million in penalties.
The senator noted how employers, particularly of financially-distressed firms and small and medium businesses, shun paying the accumulated delinquency penalties because they are bigger than the principal that should have been settled./MP