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GSIS unclips home loans from retirement benefit

Retiring members of the Government Service Insurance System (GSIS) who have outstanding service and housing loans with the pension fund will now get to enjoy their retirement benefits, without worries of having their unpaid obligations deducted or “clipped” from their retirement proceeds.
This developed after the newly-constituted GSIS Board of Trustees approved a resolution modifying its Claims and Loans Interdependency Policy or CLIP and allowed retiring members to have an opportunity to decide on the mode of settlement for their outstanding loan obligations.

CLIP is a policy under which the GSIS deducts the arrears incurred by members from their overdue loans from the proceeds of their new loan, or retirement benefits.

The new policy called CLASP or the Choice of Loan Amortization Schedule for Pensioners gives members retiring beginning 01 June 2011 under RA 660, PD 1146, and RA 8291 who are availing of an immediate pension benefit  the choice to settle their outstanding loan obligations in full or in partial terms (75 percent, 50 percent or 25 percent) which shall be deducted from their retirement benefits.
The remaining balance of the outstanding obligation shall be restructured as a loan with a rate of 10 percent per annum compounded annually, payable over a maximum period of three years.

A loan redemption insurance cover (LRI) shall be attached to the restructured loan. In case of death of the pensioner within the payment period, the outstanding balance of the restructured loan shall be covered by the insurance.
Payment of the restructured loan will begin on the first pension payment.
In addition, the total arrearages or outstanding balance of retirees’ housing loan shall not be deducted from their retirement and cash surrender value or termination value proceeds, and shall be settled separately.
“CLASP will enable members to honor their outstanding loan obligations without sacrificing their retirement benefits,” said GSIS President and General Manager Robert G. Vergara.

The new policy also addresses the inequitable deduction of housing and service loan accounts from the claims proceeds of the pension fund’s retirees.
The CLASP shall only apply from 1 June 2011 to retiring GSIS members who will avail of a retirement scheme with an immediate pension benefit as provided under RA 660, PD 1146, and RA 8291.
For retirees under RA 1616 or RA 660, PD 1146, and RA 8291 with lump sum or permanent total disability benefit, the entire obligation for all loans, except housing loan, shall be deducted from the retirement proceeds.
Meanwhile, existing policies under CLIP shall still apply to non-retirees, except housing loan arrearages which shall no longer be deducted from the loan, loan renewals, and claim for maturity benefits of members.