The Social Security System (SSS) said it has not violated any policy on lending nor overcharged its member-borrowers contrary to reports that came out in media recently.

SSS Assistant Vice President for Lending and Asset Management Ma. Luz C. Generoso emphasized 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 2000.

“In compliance with the SSC resolution, we started deducting in advance the payments for interests of salary loans in 2000 to improve the yield of our investments on member loans.” Generoso said. “The interest computation was a regular and accepted method in credit-granting,” she added.

In a previous statement, Generoso said that the state-pension fund has now revised its guidelines to keep the fund in-step with the prevailing interest rate environment.

“We wanted to align our loan interests with the market so we reviewed and made necesssary amendments in our salary loan guidelines. We forwarded this to the SSC, which they approved last April.” Generoso said.

Under the new guidelines, amortizations for short-term member loans will be computed by charging interest on the outstanding balance of the loan at the beginning of each installment period. Since the borrower will only pay interest on the amount of the principal that has not yet been repaid, interest payment is declining every period.

The 10 percent effective annual interest of the loan will be charged based on diminishing principal balance and it will be amortized over 24 months.

“Since the approval of the new guidelines, we have undertaken the revision of our computerized processing system and we will be ready to implement this by December this year. We will no longer deduct the 1st year interest from our members’ loan proceeds.” Generoso stated.

The new guidelines will also result in the increase in maximum loanable amount to P30,000 from the present P24,000 limit.- Sigfredo Ibay