SSS faces raps for loan overcharging

Social Security System officials face graft charges for overcharging its members on their loans by P27 billion since 2006 and for defying a Central Bank order to compute lower interest payments to ease the burden of members, officials said on Monday.

State auditors said the SSS also violated the limits imposed by law on loans to members to protect the viability of the fund and ensure future benefits of millions of employees based on contributions deducted from their salaries.

“I will file graft charges against them. SSS officials must understand that for members in dire need for money, every centavo counts,” said Bagong Henerasyon party-list Rep. Bernadette Herrera-Dy.

The Commission on Audit (COA) disclosed that SSS deducted nearly P800 million in advance interest from salary loans of members last year based on computations that the auditors said was excessive. The figure could run to P27 billion because the SSS has been deducting the excessive loan interests since 2006.

Under the law, the SSS can use up to 10 percent of its investible fund for loans to members. But records show that SSS has been exceeding the 10 percent limit for the past many years.

A COA report said SSS deduct in advance the interest rate of 10 percent from the loans of members and another 10 percent on the second year spread out in 24 months plus one percent service charge.

The SSS computation was in defiance of the guidelines issued by the Bangko Sentral that interest rates should be 10 percent in the first year and 10 percent on balance of the principal.

“All in all, SSS collected P1.59 billion from the one-year advance interest of its members in 2011, which is excessive by P788.8 million as advance interest should only be pegged at P803.5 milion if SSS applied the Bangko Sentral computation,” the COA report said.

Auditors also deplored the violation of the law on the cap on members loans as shown by latest facts and figures released by the SSS, which showed that as of June 2012 it released P64.816 billion loans to members, representing 19 percent of investible funds.

Rep. Herrera-Dy said SSS must refund the excess amount to members and “if legally possible, SSS should seriously consider doing away with the collection of advance interest on loans.”

“I will file a resolution on the matter so that SSS officials will be able to explain their side,” Herrera-Dy said.

A senior SSS official said they received a notice of the Bangko Sentral guideline last April and the Social Security Commission, the ruling body of the SSS, was ready to implement it.

“We still have to issue a cicular to implement it,” the official said. –Merck Maguddayao with Maricel Cruz, Manila Standard Today