Experiencing a financial gap is a common occurrence, particularly as the SSS Salary Loan looms a mere week or a few days away. Just as you anticipate seamless budget adherence, an unforeseen obstacle emerges to dismantle your plans.
Consider instances where you couldn’t amass sufficient funds for your emergency needs. The causes of our brief financial predicaments are manifold. Thus, SSS Salary Loans become a recourse we seek.
What is SSS Salary Loan?
SSS Salary Loan is a monetary advance extended by the Social Security System (SSS) to eligible members who are employed or voluntarily contributing to the system. This loan assists them in addressing their immediate financial requirements.
What is the interest rate for SSS Salary Loan?
In 2023, the interest rate for the SSS salary loan stands at 10% annually, positioning it among the loans carrying the most minimal rates within the Philippines. Calculated through a diminishing principal balance approach, this signifies that interest accrual persists on the remaining amount until complete settlement is achieved.
Who is eligible to apply, and what is the allowable borrowing amount?
Members who possess a minimum of 36 months’ aggregate contributions—wherein six months must be within the most recent 12 months prior to application month—are eligible to request an SSS loan. The granted salary loan corresponds to the earnings of a single month.
Alternatively, an application for a two-month salary loan can be made by those who boast a minimum of 72 months in contributions, with six months situated within the immediate 12 months before application.
Should you be a part of the workforce, it is imperative that your employer maintains updated records of your contribution and loan remittances.
For those categorized as individually paying members (self-employed, land-based OFW, voluntary member, or non-working spouse), a supplementary requirement applies. Specifically, qualification for the SSS salary loan mandates a minimum of six posted monthly contributions within the prevailing coverage or membership type before the application month.
What are the steps for applying for an SSS Salary Loan?
The salary loan application can be submitted by the borrower at the nearby branch corresponding to their residential or business location. Members who are registered on My.SSS have the option to electronically submit their salary loan applications. Upon online submission, employed members’ loan applications are channeled to the employer’s My.SSS account for verification. Consequently, the employer must possess an active SSS Web account.
For OFW members, an alternative is available: submitting their salary loan applications at designated SSS Foreign Representative Offices in specific countries. If an SSS office is absent in a given country, they can entrust their application and accompanying documents to their relatives within the Philippines. These authorized representatives can then file the application at the nearest SSS branch. Notably, documents issued in foreign countries must undergo proper authentication or certification via the Philippine Consulate Embassy.
It’s important to note that employers are required to submit an updated Specimen Signature Card (SS Form L-501) annually. This practice ensures smooth processing of salary loan applications and helps prevent unnecessary delays.
An SSS salary loan, covering one month, matches the mean value derived from the member-borrower’s most recent 12 Monthly Salary Credits (MSCs), or the sum requested—whichever proves lesser in value.
On the other hand, a two-month salary loan aligns with double the mean of the member-borrower’s most current 12 MSCs, rounded up to the next highest monthly salary credit, or the amount sought—selecting the lower sum.
The net loan amount corresponds to the approved loan sum minus any outstanding balance from prior short-term member loans.
Term for SSS Salary Loan Repayment and Payment Schedule
The repayment period for the loan spans a duration of twenty-four (24) months, requiring monthly installment payments over this timeframe.
Commencing from the second month after the loan initiation date, the monthly amortization process is initiated, necessitating settlement on or before the specified deadline.
Payment convenience is facilitated through options that encompass any SSS branch equipped with a tellering facility, an SSS-accredited bank, or an SSS-authorized payment center.
Interest and Penalty:
An interest rate of 10% per year will be applied to the loan, computed based on the diminishing principal balance, and spread out over 24 months.
The 10% interest will persist on the remaining principal balance until it is completely settled.
Any surplus in the amortization payment will be utilized to offset the remaining principal balance.
In the event that the loan amortization isn’t submitted by the due date, a penalty of 1% per month will be imposed until the loan is entirely repaid.
The duty of collecting and forwarding the due amortization on the member-borrower’s salary loan to the SSS lies with the employer, achieved through payroll deduction.
In cases where the member-borrower experiences voluntary (e.g., retirement or resignation) or involuntary (e.g., employment termination or company closure) separation, the employer will subtract the complete loan balance from any pending benefits owed to the employee. This amount will then be transmitted to the SSS in its entirety.
Upon an employee’s separation date from the company, along with an insufficient benefit(s) to cover the loan repayment, the employer must communicate this information to the SSS. This report, detailing the unpaid loan balance and the separation date, should be submitted through the collection list.
Newly onboarded employees are required to obtain an updated account statement from the SSS as mandated by the employer.
For new employees, any outstanding loan balance must be deducted from their pay by the employer and subsequently remitted to the SSS.
When a member-borrower changes employment, it becomes necessary to provide their new employer with an updated account statement detailing any remaining SSS loan balance. This enables the employer to perform salary deductions for the pertinent amortization, encompassing any accrued interest or penalties for delayed remittance.
Offsetting Unsettled Loans from Benefits:
When a default situation arises, the outstanding loan payments or arrears will be subtracted from the benefits that the member is claiming, prioritizing the earliest occurrence between the two scenarios, as outlined below:
For self-employed or voluntary members, deductions will be made from short-term benefits, including those related to Sickness, Maternity, or Partial Disability.
In the event of the member-borrower’s passing, total disability, or retirement as per the Social Security Act, the relevant benefit payments will be utilized to offset the entirety of the unpaid loan balance, including any associated interest and penalties, if applicable.
Overpayments from prior loans will be credited to any subsequent loans, should they exist; otherwise, the member-borrower can seek a refund upon making a request.
Address or employer changes should be promptly communicated by the member-borrower to the Member Services Section at the nearest SSS branch. This can be done via mail, email, or through in-person submission. The communication must incorporate the member-borrower’s SS number, name, and signature.