THE Social Security System (SSS) is set to reduce interest rates on salary and calamity loans within the year, according to SSS President and CEO Robert Joseph De Claro.
In a statement on Saturday, the state-run pension fund for private sector workers announced that the rate cut is one of three major initiatives planned for 2025 to enhance its services.
At present, the agency charges a 10 percent annual interest rate on these loans.
De Claro did not disclose the new rate though.
He emphasized that lowering borrowing costs would provide members with larger loan proceeds.
He noted that SSS has sufficient fiscal space to implement the reduction as it has strong investment income.
“Given the consistent and solid performance of our investment portfolio, it is the right time to revisit the interest rate on our salary and calamity loan programs,” he said.
Under Republic Act No. 11199, or the Social Security Act of 2018, SSS can allocate up to 15 percent of its investment reserve fund to various asset classes, including bonds and stocks. The fund has maintained an annualized return on investment (ROI) of 5.8 percent to 6.6 percent from 2021 to 2024, even amid the challenges of the COVID-19 pandemic.
SSS also expects increased collections from the 1 percent contribution rate hike and adjustments in minimum and maximum monthly salary credits. These changes are projected to generate an additional P51.5 billion in 2025, further supporting its lending programs.
In 2024, SSS disbursed P9.7 billion in calamity loans to over 500,000 members. Data on salary loans for the same period has yet to be released.
