Philip Cesar (not the basketball player) wasted no time in encashing the P17,000 check he received from the Social Security System (SSS) last December 2011. The amount was for an SSS Salary Loan he took out to fix the faulty transmission of his car. His salary as an employee in a private agency was just enough for his family regular expenses; funds for emergencies – such as a busted transmission – have to be sourced elsewhere. Hence, the SSS Salary Loan that Philip would have to repay for the next 24 months.

Philip is just one of the 1.06 million SSS members who were granted salary loans in 2011. The pension institution disbursed a total of P15.8 billion for members’ salary loans last year, 41 percent higher than the P11.17 billion it released in 2010 for over 803,000 member-borrowers.

“The salary loan is among the most popular SSS programs, with loan releases growing at an average rate of 14 percent for the past five years,” SSS Officer-in-Charge Edgar Solilapsi observed. “The fact that the number of borrowers has hit the one-million mark shows the tremendous personal need that our salary loans fill in our members’ lives.”

The SSS Salary Loan is a privilege granted to active members with at least 36 monthly contributions, six of which must be within the 12-month period prior to the month of loan application. Salary loans are payable in two years in 24 equal monthly installments at 10 percent annual interest. The last time the number of borrowers reached one million was in 2009, whem 1.29 million members availed of the Salary Loan.

“Majority of the salary loan borrowers in 2011 were employees. Only nine percent if the P15.8 billion, or P1.47 billion, went to self-employed and voluntary members, including overseas Filipino workers,” Solilapsi added. “These numbers highlight the value of active SSS membership, since only those who are updated in their SSS payments are entitled to salary loans.”

Also important for members to retain that privilege is for them to ensure that their salary loans are repaid on time. Salary loan delinquency has long been a problem for the pension institution, which is the reason behind its latest offering of the Loan Penalty Condonation Program. Under this new amnesty program, members are given the opportunity to pay their overdue obligations and have 50 to 100 percent of their accumulated penalties written off. The program opened last April 2 and will run until September 30, 2012.

“We urge members with delinquent loans to take advantage of this opportunity before the program ends on September 30. Otherwise, they will have to pay the full amount of penalties, and possibly have their total loan balance deducted from final benefit claims, which by then could balloon to the tens of thousands,” said Solilapsi.

This is something that members, like Philip, want to avoid. He is aware that borrowing comes with the responsibility of repayment. And if he is to continue relying on the SSS Salary Loan for personal emergencies, he knows that it is a privilege that must not be taken for granted.