Date Posted: 2011-06-27 18:01:43

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.

 

Frequently Asked Questions on Choice of Loan Amortization Schedule for Pensioners (CLASP)

What is the CLASP?

The CLASP is a collection tool of the System designed purposely for retiring GSIS members to provide them with an option for the settlement of their outstanding loan obligations.

Why did the GSIS replace the Claims and Loans Interdependency Policy (CLIP) with CLASP policy?

The CLIP was replaced by CLASP to modify the previous CLIP and establish a collection mechanism that is acceptable to retiring members by providing a less burdensome settlement for their outstanding obligations.

What is the difference between CLIP and CLASP?

Both CLIP and CLASP are tools in the collection of the members’ loan obligation. For CLIP, the outstanding balances of all loans are deducted from the retirement proceeds. However, for CLASP, the retiree is given the option to settle his/her outstanding obligations in whole (100%) or a percentage thereof (75%, 50% or 25%) which shall be deducted from his/her retirement proceeds. The remaining balance of the outstanding balance shall be restructured as a loan payable in equal installments for a maximum period of three (3) years at 10% p.a.c.a. interest rate.

What are the loan accounts covered by CLASP?

All service loan obligations of a retiring member with the GSIS shall be covered by CLASP, except for housing loans.

If the housing loan will not be covered under this policy, how will the GSIS be able to collect the unpaid housing loan obligation of a member-retiree?

Since housing loans are collateralized, the GSIS will collect the outstanding housing loan obligation of a member through a separate collection scheme.    

Who are qualified to avail of CLASP?

The CLASP policy shall apply only 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.


Is the CLASP policy applicable to active members?

The CLASP policy is not applicable to active GSIS members. The intention of the policy is to provide retirees, who will avail of the retirement scheme with an immediate pension, with options for the settlement of their loan obligations.
 
Why are member-retirees under RA 1616 not covered by CLASP? 

Since retirees under RA 1616 opted to receive a refund of retirement premiums in lumpsum, they will not be receiving pension. The options provided under the CLASP policy are 100%, 75%, 50% or 25% settlement of outstanding obligations upon retirement and restructure the remaining portion over a maximum of 3 years, deductible from the monthly pension of the pensioner.

If RA 1616 retirees will be entitled to CLASP, GSIS will be assuming a higher risk since these retirees no longer have future benefits from which the GSIS could collect the outstanding obligations, in case of default of the restructured loan or death of the retiree.

If a retiree is below 60 years old, is he/she qualified for the restructured loan under CLASP?

No. Only retirees under RA 660 or PD 1146 with immediate pension benefit or RA 8291 with cash payment equivalent to 18 months plus immediate pension benefit are qualified to avail of the restructured loan under the CLASP policy. Retirees below 60 years of age are obliged to pay the entire obligation by deducting the same from their separation benefits.

How can member-retirees settle their outstanding loan obligations thru CLASP? Are there options on the settlement of loan accounts?

The settlement of loan obligations depends on the choice of mode of payment of retirement benefits being claimed, given as follows: 

  1. For Retirees under RA 1616 or RA 660 / PD 1146 / RA 8291 with a lump sum or permanent total disability benefit, the entire obligation for all loans, except housing loan, shall be deducted from the retirement proceeds.
  2. For Retirees under RA 660 or PD 1146 with immediate pension benefit or RA 8291 with cash payment equivalent to 18 months plus immediate pension benefit: a) The member-retiree may choose to settle his outstanding obligations in whole (100%) or a   percentage thereof (75%, 50% or 25%) which shall be deducted from his/her retirement proceeds. b) The remaining balance of the outstanding obligation shall be restructured as a loan with a rate of 10% per annum compounded annually, payable over a maximum period of three (3) years.


Since the remaining outstanding balance of the obligation is restructured as a loan, are there other fees that will be charged to the retiree? 

No fees shall be charged to the restructured loan. However, a loan redemption insurance (LRI) cover shall be attached to the restructured loan, computed based on the repayment term chosen. The premium for LRI shall form part of the computed monthly amortization of the restructured loan. 

What is the purpose of having an LRI?

In case of death of the pensioner within the payment period, the outstanding balance of the restructured loan shall be covered by the LRI. By having an LRI, the pensioner is assured that the restructured loan will not be passed on to his dependents/legal heirs and therefore, the benefits to be received by the latter will not be reduced.

Can member-retirees have the option to choose the repayment term of the restructured loan? 

Yes, member-retirees will be given the option to choose the period within which the restructured loan can be settled.  The loan will be payable in 1, 2 or 3 years, at the option of the retiree.

When will the first payment on the restructured loan be deducted from the monthly pension?

The first due date (FDD) of the restructured loan shall be on the month in which the 1st pension payment shall start.

What will happen if the pensioner dies within the payment period of 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 LRI.

What will happen to the restructured loan account of a pensioner residing abroad who becomes tagged as suspended?


In case of a pensioner residing abroad who was tagged as suspended due to failure to comply with the ARAS anytime within the payment period, the following policies shall apply:

  1. If the pensioner consequently renews, the suspension shall be lifted and the accrued pension (net of the monthly amortizations for the restructured loan) shall be credited to the account of the pensioner.
  2. In case of the demise of a pensioner abroad while tagged as suspended: a)The accrued pension (net of the monthly amortizations for the restructured loan) pertaining to the period prior to the demise of the pensioner shall be credited to the account of the pensioner and the outstanding balance of the restructured loan shall be covered by the LRI from the date of death of the pensioner up to the end of the loan term. b) The outstanding balance of the restructured loan shall be covered by the LRI from the date of death of the pensioner up to the end of the loan term.


Is a pensioner with restructured loan allowed to avail of a Pension Loan?

The retired member shall not be allowed to avail of the regular Pension Loan until such time that the restructured loan obligation has been fully paid.

When is the effectivity of the CLASP policy?


The policy shall be effective on June 1, 2011, and shall be applied prospectively to retiring GSIS members.