State-run Social Security System (SSS) said that its enhanced pension loan program (PLP) declined by double digits in the first eight months of the year due to lower number of pensioner-borrowers.
In a statement, Aurora C. Ignacio, SSS president and chief executive officer said that PLP approved loans reached P1.92 billion in January to August, down 17 percent compared with P2.31 billion in the same period last year.
“We can attribute the decrease in approved pension loans to the lower number of pensioner-borrowers this year,” Ignacio said. “It is partly due to the restricted mobility for senior citizens brought by the quarantine protocols.”
“Also, some of them are still repaying their pension loans granted to them last year,” she added.
Based on the SSS data, there were 43,424 pensioner-borrowers at end-August 2021, 15 percent lower than the 51,121 a year earlier.
SSS Bacolod branch has the highest amount of approved pension loans at P89.36 million for 2,649 pensioners, while Cebu placed second with P44.87 million approved pension loans for 962 borrowers.
SSS Davao came in third with P38.26 million loans for 930 borrowers. Other branches included in the top five branches with the highest approved pension loans were Bacoor with P37.38 million for 722 borrowers and Antipolo with P33.45 million for 651 borrowers.
Launched in September 2018, PLP aims to assist SSS retirement pensioners in their financial needs and prevent them from becoming victims of private loan sharks with higher interest rates and taking their ATM cards as collateral.
Ignacio further encourages the retirement pensioners to avail the PLP since it is designed to help them in their short-term financial needs.
“We recognize that they need financial assistance to help augment their daily expenses, especially that we are in a pandemic. PLP can help cover expenses for their medicines, vitamins, and other healthcare needs,” Ignacio explained.
Under the program, qualified retirement pensioners can avail of a loan equivalent to three, six, nine, or 12 times their basic monthly pension (BMP) plus the P1,000-additional benefit.
However, the loanable amount should not exceed the maximum loan limit of P200,000. In addition, the net take-home pension of the pensioner-borrower should at least be 47.25 percent.
A pension loan equivalent to three and six times the pensioner’s BMP plus the P1,000-additional benefit will have a payment term of six and 12 months, respectively.
Meanwhile, a pension loan equivalent to nine or 12 times the BMP plus the P1,000 additional benefit will have a 24-month payment term.
The pensioner’s first monthly amortization will be due on the second month after SSS grants the loan. For example, if the loan is given in August, SSS will deduct the first monthly amortization from the pensioner’s monthly pension in October.
Pension loans will incur an interest rate of 10 percent per year until fully paid computed on a diminishing principal balance.