COA: SSS owes P979 million to members

MANILA, Philippines – The Social Security System (SSS) owes almost 2.2 million of its members some P979.49 million in loan overpayments and is not doing enough to refund the amount.

The Commission on Audit (COA), in its 2009 report, said 2,191,005 SSS borrowers of salary, educational, calamity, separated, and emergency (SECSE) loans are being deprived of their own money.

Refunds other than those for death, disability, and retirement over deductions are also only being made upon receipt of a formal request from members, considering that many do not even know that they paid too much.

“Refunds to borrowers who have existing loans are directly applied to their current loans and this activity is being undertaken by the Member Loans Accounting Department. Member-borrowers were not informed that overpayments were applied to their existing loans nor were they aware of their overpayments,” the COA report said.

The COA report noted that while the unrefunded amount helped SSS through its investments, “it seemed unfair to the affected members since they should have taken the full or proportionate benefit derived from such investments.”

“SSS’s slow pace in processing of refunds did not only cause dissatisfaction to 2,191,005 affected member-borrowers but also deprived them and their families of the amount due them as well as the full benefits of the income derived there from,” the audit emphasized.

COA said the primary mandate of the SSS is to provide meaningful protection to members and their beneficiaries against contingencies resulting in loss of income or financial burden as it also provides its members short-term loan windows from which the latter could borrow funds for their financial needs.

COA recommended the fast tracking of payments for loan refunds to SECSE loan borrowers and that the same be made even without the members’ request, since most of them are not aware of the overpayments.

“Closely monitor the payment of the refunds since the money rightfully belongs to the borrowers, which should be returned as soon as possible,” the audit report said.

COA said the SSS management pledged to put in place measures that will be implemented to address the causes of overpayment on member loans.

Increased delinquent loans

While the SSS owes its members, more than six million of its members, on the other hand, owe the agency some P27.51 billion in unpaid loans.

COA observed that loan delinquency increased at an average rate of 5.86 percent annually due to the inadequate enforcement of collection strategies for SECSE loan accounts, from P20.73 billion in 2004 to P27.51 billion in 2009, which represents 62.38 percent of the total SECSE account.

The audit report explained that an account is considered delinquent when the borrower fails to pay his loan amortization on the month it is due.

It noted that the so-called Aging of Accounts for SECSE as of Sept. 30, 2009 showed that 6,684,653 accounts amounting to P27,510,379,580 were already delinquent.

Of the amount, COA said P19,433,755,462 covering 4,318,089 accounts were three years and above delinquent, but despite the substantial amount of delinquency, no provision for impairment loss was made by management nor was the aging of this account presented in the financial statements of SSS.

“It was noted that not all collections from final claims of member-borrowers were derived from delinquent accounts. Thus, considering the two sources, total collections for the last five years accounted for only 13.49 percent of the total delinquent accounts which as of Sept. 30, 2009 had a balance of P27,510,379,580.”

The COA report recommended, among others, that the SSS intensify efforts to collect delinquent loans and consider preparing a Collection Efficiency Rating system to monitor status of payments.

In response, SSS stated that it aims to collect P19 billion in the next three years mainly from active delinquent members who are covered employees.

SSS said the target is tied to measures that will be implemented and that would allow the agency to actively run after delinquent borrowers though policy changes followed with strict enforcement; procedural enhancements; and the utilization of appropriate Information Technology solutions that would enable SSS to track, monitor and promptly collect from member-borrowers. –Michael Punongbayan (The Philippine Star)