Many OFWs do not know that they can avail of salary loans from the Social Security System (SSS) even if they are abroad. You can use these loans for whatever purpose you need. We outline some important points for you and we hope you find this guide useful in applying for a loan. Read on to find out how you can avail of this benefit.
SSS is one of the many offices that seek to make life easier for Filipinos here and abroad. It is a state-run, social insurance program that caters to workers in the professional, private and informal sectors.
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Normally if you’re working in the Philippines, your registered company will set up the monthly contribution automatically. However, it gets tricky when you’re an OFW working for a company abroad. You have to voluntary send your monthly SSS contribution every month. Accredited money exchange centers are one of the ways that you can send your monthly contribution, another one would be to have a family/friend to regularly submit your contribution on your behalf.
No matter what’s your preferred method, we advise you not to take this for granted it’s good to have some form of pension as we become older.
For a one-month salary loan, a member must have posted 36 monthly contributions. Six of the contributions must have been made within the last 12 months prior to the application filing.
For a two-month salary loan, a member must have posted 76 monthly contributions in total. Six of the contribution must have been made in the 12 months prior to the application of the loan.
A member can avail of a loan based on an average of the 12 monthly salary credits or MSCs.
For a one-month salary loan, the amount is based on this MSC or the loan amount whichever is lower.
For a two-month salary loan, the amount is based on twice the MSC or the loan amount whichever is lower.
How long will you pay the loan?
You can pay the loan in 24 monthly installments. It would begin in the second month after the approval and release of the loan. Payments must be made before the payment deadline as per SSS Circular 2011-03.
How much is the interest rate for the salary loan?
An SSS salary loan is charged a 10% yearly interest. This is based on the diminishing principle balance. Any excess in the payment made will go to principal amount.
In case of delinquent payments, what will happen?
In case a member fails to make a payment on time, there will be a 1% penalty charged to your account.
Are there service fees?
Yes. The SSS will charge a 1% service fee and deduct it from the loan proceeds.
Here are the steps that you need to do if you want to apply for a salary loan:
If you are not going to personally file the salary loan, you can have someone file it for you. He or she is going to be your authorized representative.
He or she must bring the following:
If the salary loan will be filed by an Employer’s Representative, he or she should bring the following:
You can file the loan either at the SSS Representative Office in the country where you are deployed or if there is no SSS office, you can the application and the support documents to the Philippines for filing at the nearest SSS branch.
Any documents from abroad should be authenticated by the authorized representative of the Philippine Consulate or Embassy.
Salary loans can help you establish a business or to pay for immediate needs. Use it wisely and make sure you would pay for it so the funds can circulate and help other OFWs in need.
