SSS has upgraded its systems to inform Employers the current status of their employees’ outstanding loans as of October 2020. Most employers got a bill similar to the below last week:The email was NOT a hoax. It is a legitimate email from SSS informing employers to pay for their employees’ total loan amortization.
Many employers were surprised because the list reflects all the loans incurred by their employees even before they were employed within the company. In my list, the oldest outstanding loan was dated June 1998, way back when I was in high school!
So today, my blog post is all about SSS overdue loan payments. Flow is as follows:
Let’s start shall we?
If you have not received any love letter yet, please check your SSS Employer Portal ASAP to find out how much you have to pay by the end of the month. Steps are as follows:
Failure to fulfill the above-mentioned legal obligations of the employer is penalized as provided under Section 28 of Republic Act 8282, or the Social Security Act of 1997.
Screwing with SSS is a criminal act which not only leads to penalties but also to imprisonment of up to 12 years. There are also Civil and Administrative Liabilities as follows:Source: Legal Obligations of Employers
EMPLOYEE’S PROBLEM
It is employee’s responsibility to inform his new employer about his existing loan balance as he may allow his new employer to deduct loan payments from his salary, including any interest or penalty incurred due to late remittances from his previous employer.
It is the responsibility of SSS member to regularly check and monitor his records so he can immediately call the attention of employer or report discrepancies to SSS. SSS sends SMS notification to members whenever a loan payment is posted in their accounts.
EMPLOYER’S PROBLEM
It is the employer’s responsibility to deduct from his employees’ salaries monthly loan amortizations based on the scheduled payment deadlines for SSS member loans and remit the same to the nearest SSS branch with tellering.
It is the employer’s responsibility to deduct the outstanding loan balance of his resigning employee. Employer must remit the amount and inform SSS of employee’s departure. If amount was deducted from employee’s separation pay, any proof that the remitted amount was equivalent to the employee’s outstanding loan balance will mean he has fully paid his SSS loan. Employer must present the loan transaction receipt (SSS ML2 Payment Form) and corresponding Loans Collection List (LCL), with employee name, as proof of payment. Otherwise, the loan will continue to incur interest and penalties.
In cases where employer failed to remit the deducted amount to SSS, employee may complain at any SSS branch. SSS will investigate. If the claim is valid and employer is still operational, SSS will bill employer and collect the deducted amount in favor of member-borrower. Employee must present proof that the amount was deducted from him to help establish his complaint where employer may be at fault.
Computation of a member’s outstanding loan obligation depends on payor’s (member or employer) compliance with payment schedule. Any payment made after due date incurs interest and penalties . Our loan system calculates remaining loan balance based on posted payments, date of payments, and amount paid at time of inquiry. Therefore, non-payment of loans will incur corresponding interest and penalties until loan has been fully settled.
According to the SSS, employers must submit a Notarized Affidavit informing SSS that Employees A to D are now separated. The affidavit must be signed by the Company’s signatory and include the date on when the employee was separated. Submit the Notarized Affidavit on the dropbox of their assigned SSS branch.
SSS said that there is no specific template Employers are to follow. Hence, sharing with you my company’s template for your reference. You can download the form for free here: AFFIDAVIT OF Separation of Employment – General Form:
For EMPLOYEES WITHOUT ANY LOANS, SSS instructs us to use the R1-A File, which you can download here: SSS Employment Report.
Yes but not now.
Unfortunately, SSS has NOT yet offered any Loan Restructuring Program this year. As of the moment, SSS officers cannot confirm when the next schedule of restructuring will be.
Their last restructuring program was two years ago, lasting April 2 to October 1, 2018. The Loan Restructuring Program (LRP) with penalty condonation was then extended for another six months or until April 1, 2019. However, many of our fellowmen ignored the offering and continued to be delinquent on their loans.
Sayang talaga! The program covered all member-borrowers with past due loans (e.g., Salary Loan, Emergency Loan, Educational Loan (old), Study Now Pay Later Plan, Voc-Tech Loans, Y2K Loans and Investments Incentive Loan). To qualify under the second LRP, the loan must be past due for at least six months from the start of the second implementation of LRP.
In other words, the SSS Loan Restructuring Program is a wonderful initiative by the government. Employees get a reprieve from paying the penalty fee they’ve accumulated after many years of non-payment. The penalty for non-payment is 1% per month.
However, there is NO Loan Restructuring Program yet so employees have to wait until the next round, and continue seeing their loans balloon as the interest payments pile up.
This my friend is the beauty of compounding.
When it comes to loan repayments, interest rate matters. Very quickly, SSS Salary Loans incur an average of 10% interest, while Calamity Loans usually incur around 6% of interest. This does not include the 1% PER MONTH penalty when you don’t pay your loans on time.
Here is a very simplified SSS Loan Calculator I have created to show you the dangers of not paying your amortizations on time. You can download the SSS Loan Calculator and input your initial loan amount and to see how it can quickly balloon to ridiculous amounts in over a few short years:
Given the example of Php 15,000 Salary Loan, if unpaid, the 10% annual interest and 1% monthly interest can quickly explode the total due to a whopping Php 132,705 in just a matter of 10 years.
The numbers do not lie. Do NOT incur any loans unless you are willing to pay for them on time. If you can’t, don’t make that loan unless you want to see your SSS retirement fund whittle away into nothingness. Baka may utang ka pa sa SSS once you retire.
I see THREE (3) concrete solutions to the problem:
I am doing this with my Office Staff who only has Php 4,000 of overdue loan payments due to the ECQ. We already talked about it and I have agreed to advance her SSS overdue loan payments. She has signed Authority to Deduct (ATD) for Php 1,000 in November 2020, Php 1,000 in December 2020, Php 1,000 from her 13th Month Pay and Php 1,000 in January 2021. This ensures her loan amortization is updated.
My friend will deduct Php 2,000.00 from the payroll. Breakdown as follows:
Given that most of the payments made today will only go to penalties, the Employer and Employee have both agreed to set aside a portion for the purpose of paying the SSS Loan once SSS opens up its restructuring program. If the staff leaves the company, the money held in trust will be used to pay for the SSS Loan on the last month of their employment.
Here is the downloadable Agreement and Authority to Deduct for SSS Overdue Loan:I I
I honestly think it’s a brilliant idea as it helps people save money to pay off their SSS Overdue Loans. By themselves, people may not have the discipline to save up the money and pay off the loan. Hence, they will be forever indebted to SSS and will most likely not see a penny of their retirement fund kasi naubos na sa pambayad ng SSS loans and penalties.
This is actually the correct most legal way — Employers will aggressively deduct a fixed amount from the salary and pay off the loan as SSS is already billing the company of their staff’s overdue loans.
Talk to your employer first.
I have cases when the employer DID remit but there was just a boo boo from the side of SSS in posting the contribution payment. There are cases they remitted but was not recorded. If so, inform your employer so the SSS can correct your records.
If they did deduct and did not remit — AND YOUR EMPLOYER DID NOT TAKE ACTION AFTER MULTIPLE FOLLOWUPS — you can report them to SSS directly with proof of deduction (payslip). Report your delinquent employer to the SSS for a possible legal action.
Bring your payslip as a proof of deduction and your Company ID, Employment Contract, Income Tax Return as a proof of your Employment in the Company.
Look for the Accounts Management Section of the SSS Branch and SSS Accounts Officer will take your complaint about non-remittance.
Let this be a good lesson for everyone — When someone offers you a loan, only take it when you know you can afford to pay for it ON TIME.
So many employees fall into the trap of applying for a loan and then forgetting about it. They forget that even when they forget to pay off their loans, SSS never forgets and given that everything is already automated, loans from two decades ago will still come back to haunt them until it gets paid.
Check out the loan amounts!
Did Christy ever think that her Salary Loan of Php 15,000 made last August 2001 would now ballooon to a whopping Php 84,000 in 2020? Ben’s loan of only Php 7,000 in 2004 is now at Php 70,000. And Lord help me how Maricel got her loan up to Php 120,000!
Pag nangutang, kailangan magbayad. Pag hindi kayang magbayad, huwag mangutang.
And if your employer deducts your salary now to pay off your SSS Loan, huwag sumimangot. They are just doing their legal obligation as your employer because failure to do so is a criminal, civil AND administrative offense. If you don’t want to have your salary deducted, stop borrowing. And if you do, pay for it timely. That way, nobody’s in this muck.
For those who are complaining about the penalties, SSS is actually not mukhang pera. The agreement was all written when people apply for a loan. It’s on the back of the form. People should have read it before applying and taking the money they freely borrowed. The rules are clear:
1. Interest rate: 10% per annum for Salary Loan, 6% per year for Calamity Loan
2. 1% penalty per month if you paid late
The rules are clear —- bakit hindi binasa ng tao when nag apply sila ng loan? Dapat on time kasi sila magbayad para walang penalty.
If people want free money, they can always ask from their family. Otherwise the other alternative is the local loan shark that charges 10% interest PER MONTH.
Just my two cents. Have a very good weekend everyone!
