THE GOVERNMENT Service Insurance System (GSIS) has approved a new system for collecting loan amortizations from members who have complained that the old scheme would eat up their retirement benefits.
In a statement, GSIS said its Board of Trustees has “modified” the state pension fund’s Claims and Loans Interdependency Policy (CLIP) and has sanctioned a new policy called Choice of Loan Amortization Schedule for Pensioners (CLASP).
Under CLIP, GSIS had deducted the entire outstanding amounts of members’ loans from their retirement benefits upon their retirement.
While this shielded the fund from bad loans, it also wiped out members’ retirement benefits.
Noting pensioners’ complaints, GSIS came up with a scheme that would give members retiring beginning in June the option to settle their loan obligations in full or in partial terms.
Members who have retired before June, however, would not be covered by the new policy.
Under the CLASP, members may settle their outstanding loan obligations in full or choose to settle just 25%, 50% or 75% of these obligations.
The rest would be restructured as a new loan with an interest rate of 10% per year compounded annually, which must be settled within three years.
Payment of the restructured loan would begin with the first pension payment.
GSIS said a loan redemption insurance would be attached to the restructured loan so that in case the pensioner dies during the payment period, the loan balance would be covered by the insurance. — A. R. R. Gregorio, Businessworld
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