Chapter 6 to 7

Rural Banks
Government Non-
Financial
Institutions
 Rural Banks
These are organized to promote and expand
the rural economy in an orderly and effective
manner by providing farmers and small
businessmen with means of facilitating and
improving their productive facilities.
In granting the loans, rural banks shall give
preference to the applications of farmers and
merchants whose cash requirements are small.
 Services Performed by Rural
Banks
1. Accept savings and time deposits.
2. Open current and checking accounts
provided the rural bank has net assets
of at least P5 million, subject to such
guidelines as may be established by
the Monetary Board.
3. The rural banks act as a correspondent
bank for other financial institutions.
 Services Performed by Rural
Banks
4. Act as a collection agent.
5. Act as official depository of municipal,
city or provincial funds in the
municipality, city or province where it is
located subject to such guidelines as
may be established by the Monetary
Board.
 Services Performed by Rural
Banks
6. Rediscount paper with the Land Bank of the
Philippines, the Development Bank of the
Philippines or any other banking institution
including its branches and agencies.
7. Extend financial assistance to private and
public employees .
8. With a written permission of the Monetary
Board of the Central Bank, any rural bank
may act as trustee over estates or properties
of farmers and merchants.
 Government Non-Bank
Financial Institutions
Social Security System (SSS) provides
retirement benefits, funeral benefit, housing
loans, personal loans and calamity loans to
employees who are working in private
companies and offices.
Government Service Insurance System
(GSIS) provides retirement benefits,
housing loans, personal loans, emergency
loan, and calamity loans to government
employees.
 Government Non-Bank
Financial Institutions
Pag-Ibig Provides housing loans to both
government and private employees.
 Social Security System
Covered employees are entitled to a package
of benefits under the Social Security and
Employees' Compensation (EC) Programs
in the event of:
death,
disability,
sickness,
maternity, and
old age.
Self-employed and voluntary members also get the
same benefits as covered employees.
 Social Security System
Basically, the SSS provides for a replacement
of income lost on account of the
aforementioned contingencies. The benefits
under the Social Security Program are:
Sickness
Maternity
Disability
Retirement
Death
Funeral
 Social Security System

The sickness benefit is a daily cash

allowance paid for the number of days a
member is unable to work due to sickness or
injury.
The maternity benefit is a daily cash
allowance granted to a female member
who was unable to work due to
childbirth or miscarriage.
 Social Security System

The retirement benefit is a cash benefit either in

monthly pension or lump sum paid to a member who
can no longer work due to old age.

Adopting the World Health Organization's (WHO)

definition, disability is any "restriction or lack
(resulting from impairment) of ability to perform an
activity in the manner or within the range considered
normal for a human being".
 Social Security System

Death benefit is a cash benefit either in monthly

pension or lump sum paid to the beneficiaries of a
deceased member.

Funeral benefit is a cash benefit given to

whoever pays the burial expenses of the
deceased member or pensioner.
 SSS Benefit ---Sickness
A member is qualified to avail of this benefit if:
A member is unable to work due to sickness or injury and
confined either in a hospital or at home for at least four (4) days;
He/she has paid at least three (3) months of contributions within
the 12-month period immediately before the semester of
sickness or injury;
He/she has used up all current company sick leaves with pay;
and
He/she has notified the employer regarding his sickness or
injury by filing the sickness benefit application; if he/she is
unemployed, voluntary or self-employed member, the sickness
notification should be submitted directly to SSS.
 SSS Benefit ---Sickness
(Computation)
For example, let us say that an SSS member gets sick or injured in
October 2013 for 20 days:
The semester of sickness would be from July 2013 to December 2013.
The 12-month period would be from July 2012 to June 2013 within which
the six highest monthly salary credits will be chosen.
Let us assume that the six highest monthly salary credits are P15, 000
each. The total monthly credit would be P90, 000 (P15, 000 x 6).
The total monthly salary credit would be divided by 180 to get the
average daily salary credit of P500 (P90,000/180).
The daily sickness allowance is 90 percent of the of the average daily
salary credit or P450 (P500 x 90%).

The sickness benefit due is P9,000 (P450 x 20 days).

 SSS Benefit ---Sickness
(Computation)
IMPORTANT!
The payment of the daily sickness allowance is advanced by the
employer every regular payday. The SSS will then reimburse
the employer of the amount legally advanced upon receipt of
satisfactory proof of such payment and legality thereof.

For unemployed, self-employed or voluntary members, the

sickness benefit will be paid directly by the SSS to the member.

The SSS will reimburse the employer only for confinements

within the one year period immediately preceding and the date
the claim for benefit or reimbursement is received by the SSS,
except for confinements in hospital.
 SSS Benefit ---Maternity
The maternity benefit is offered only to female SSS members. A member
is qualified to avail of this benefit if:
She has paid at least three monthly contributions within the 12-
month period immediately preceding the semester of her
childbirth or miscarriage.
She has given the required notification of her pregnancy to SSS
through her employer if employed; or submitted the maternity
notification directly to the SSS if separated from employment, a
voluntary or self-employed member.
The maternity benefit shall be paid only for the first four (4)
deliveries or miscarriages starting May 24, 1997 when the Social
Security Act of 1997 (RA 8282) took effect.
 SSS Benefit ---Maternity
(Computation)
For example, let us say that an SSS member gives birth in December
2013.
The semester of contingency would be from July 2013 to December
2013.
The 12-month period before the semester of contingency would be
from July 2012 to June 2013.
Let us assume that the six highest monthly salary credits are
P15,000 each. Thus, the total monthly salary credit would be
P90,000 (P15, 000 x 6).
The daily maternity allowance would be P500 (P90,000/180).
The total maternity benefit due would be P30,000 (P500 x 60
days) for normal delivery/miscarriage/ectopic pregnancy not
requiring operation, or P39,000 (P500 x 78) for caesarian cases
or ectopic pregnancy requiring operation.
 SSS Benefit ---Maternity
(Computation)
The maternity benefit shall be paid only for the first
four (4) deliveries or miscarriages starting May 24,
1997 when the Social Security Act of 1997 (RA8282)
took effect.
For employed members, the benefit is advanced by
the employer to the qualified employee, in full, within
30 days from the date of filing of the maternity leave
application. The SSS, in turn, shall immediately
reimburse the employer 100 percent of the amount of
maternity benefit advanced to the female employee
upon receipt of satisfactory proof of such payment
and legality thereof.
 SSS Benefit ---Retirement
A member is qualified to avail of this benefit if:
Member is 60 years old, separated from employment or ceased to
be self-employed, and has paid at least 120 monthly contributions
prior to the semester of retirement.
Member is 65 years old, whether employed or not, and has paid at
least 120 monthly contributions prior to the semester of retirement.

Underground Mineworkers:
Aged 55 years old and is an underground mineworker for at least 5
years (either continuous or accumulated) prior to the semester of
retirement but whose actual date of retirement is not earlier than March
13, 1998; separated from employment or has ceased self-employment;
and has paid at least 120 monthly contributions prior to the semester of
retirement.

Aged 60 years old, whether employed or not, and has paid at least 120
monthly contributions prior to the semester of retirement.
 SSS Benefit ---Retirement
There are two types of retirement benefit:
monthly pension - a lifetime cash benefit paid to a
retiree who has paid at least 120 monthly
contributions to the SSS prior to the semester of
retirement.

lumpsum amount - granted to a retiree who has not

paid the required 120 monthly contributions. It is
equal to the total contributions paid by the member
and by the employer including interest.
 SSS Benefit ---Retirement
Monthly Pension
Benefit Computation:

The monthly pension depends on the member's paid

contributions, his credited years of service (CYS), and
the number of his dependent minor children that must
not exceed five. The monthly pension will be the highest
amount resulting from either one of these three pension
formulae:
 SSS Benefit ---Retirement
Monthly Pension Let us say that an employee retired at
Benefit Computation: the age of 60 years old with the
following salary credit, compute the
monthly benefit pension:
1. the sum of P300 plus 20
percent of the average CYS MSC
monthly salary credit plus two
10 10,000
percent of the average
monthly salary credit for each 10 10,000
credited year of service (CYS) 5 15,000
in excess of ten years; or 5 16,000
2. forty (40) percent of the 5 16,000
average monthly salary credit;
or
3. P1,200, if the CYS is at least
10 but less than 20; or P2,400,
if the CYS is 20 or more.
 SSS Benefit ---Retirement
Monthly Pension
Benefit Payment:
The retiree-member has the option to receive the first 18
months' pension paid out in lumpsum, but discounted at a
preferential rate of interest to be determined by the SSS. The
member shall start receiving his pension on the 19th month,
and every month thereafter. This option for advance payment
shall be exercised only when filing the first retirement claim.
It is only the advanced pension payments that are discounted
on the date of payment; the dependent's allowance and 13th
month pension are excluded from the advanced 18-month
pension amount.
 SSS Benefit ---Retirement
IMPORTANT!
Upon the death of a retiree pensioner, the primary beneficiaries shall
be entitled to 100 percent of the monthly pension, and the dependents
to the dependents' allowance.
If the retiree pensioner dies within sixty (60) months from the start of
the monthly pension and has no primary beneficiaries, the secondary
beneficiaries shall be entitled to a lumpsum benefit equivalent to the
total monthly pensions corresponding to the balance of the five-year
guaranteed pension period, excluding the dependents' allowance.
In case the retiree-member who is less than 65 years old resumes
employment or self-employment, the monthly pension shall be
suspended and the member shall again be subjected to compulsory
coverage.
If the retiree-member is 65 years old and older, he can resume
employment or self-employment without prejudice to his monthly
pension and without need for compulsory coverage.
 SSS Benefit ---Disability
A member who suffers partial or
total disability with at least one one thumb
monthly contribution paid to the SSS one index finger
prior to the semester of contingency one middle finger
is qualified. one ring finger
Partial Disability one little finger
hearing of one ear
A complete and permanent loss hearing of both ears
or use of any of the following sight of one eye
body parts, but which does not one big toe
totally prevent a member from one hand
engaging in any gainful one arm
occupation. one foot
one leg
one ear
both ears
 SSS Benefit ---Disability
Permanent Total Disability
complete loss of sight of both eyes;
loss of two limbs at or above the ankle or
wrists;
permanent complete paralysis of two limbs;
brain injury resulting to incurable imbecility or
insanity; and
such cases as determined and approved by
the SSS.
 SSS Benefit ---Disability
(Computation)
Monthly Pension Benefit Computation
The monthly pension depends on the member's paid
contributions, his credited years of service (CYS), and
the number of dependent minor children that must not
exceed five. The monthly pension will be the highest
amount resulting from either one of these three pension
formulae:
 SSS Benefit ---Disability
(Computation)
1. the sum of P300 plus 20 percent of the average monthly
salary credit plus two percent of the average monthly
salary credit for each credited year of service (CYS) in
excess of ten years; or
2. forty (40) percent of the average monthly salary credit; or
3. P1,000, if the CYS is less than 10; P1,200 if with at least
10 CYS; or P2,400, if the CYS is 20 or more.
 SSS Benefit ---Death
There are two types of death benefit paid to beneficiaries
of a member: Pension and Lumpsum Amount.
To qualify for either, the member must have met the
following:
For Pension - the deceased member must have paid at
least 36 monthly contributions before the semester of
death.
For Lumpsum Amount - granted to the primary
beneficiaries of a deceased member who had paid less
than 36 monthly contributions before the semester of
death. Also, in the absence of primary beneficiaries, the
secondary beneficaries are granted the death benefit in
lumpsum amount.
 SSS Benefit ---Death
(Computation)
Monthly Pension Benefit Computation
The monthly pension depends on the member's paid
contributions, his credited years of service (CYS), and
the number of dependent minor children that must not
exceed five. The monthly pension will be the highest
amount resulting from either one of these three pension
formulae:
 SSS Benefit ---Death
(Computation)
1. the sum of P300 plus 20 percent of the average monthly
salary credit plus two percent of the average monthly
salary credit for each credited year of service (CYS) in
excess of ten years; or
2. forty (40) percent of the average monthly salary credit; or
3. P1,000, if the CYS is less than 10; P1,200 if with at least
10 CYS; or P2,400, if the CYS is 20 or more.
 SSS Benefit ---Funeral

For self-employed/ non-working spouse/ OFW members -

the deceased SSS member must have paid at least one
(1) monthly contribution, for his/her beneficiaries to be
entitled to the funeral benefit.

For employed members and those separated from

employment - the deceased must been reported for
coverage by his/her employer, even if no contribution was
paid, for his/her beneficiaries to be entitled to the funeral
benefit.
 SSS Benefit ---Funeral
A funeral grant of P20,000 (effective September 1, 2000) is
given to whoever pays the burial expenses of the deceased
member or pensioner.
 SSS Loans
Members Loans salary loan
Housing Loans
a. Direct Housing Loans for Workers
Organization Workers
b. Direct Housing Loans for OFWs
c. House Repair/Improvement Loan
d. Assumption of Mortgage
Business Loans
SSS Contribution Schedule
 Home Development Mutual Fund
HOUSING LOAN AVAILMENT
This housing loan program grants opportunities to Pag-IBIG
Fund members to avail of housing loans to finance any one
or a combination of the following:
1. Purchase of a fully developed lot not exceeding 1,000
square meters, which should be within a residential
area;
2. Purchase of a residential house and lot, townhouse or
condominium unit, inclusive of a parking slot, which
may be:
a. Old or brand new;
b. A property mortgaged with the Fund; or
c. An acquired asset, which is disposed of through
sealed public bidding, negotiated sale, the Rent-to-
Own Program, or the Magaang Pabahay,
Disenteng Buhay Program.
 Home Development Mutual Fund

3. Construction or completion of a residential

unit on a lot owned by the member;
4. Home improvement, i.e. any alteration in an
existing residential unit intended by a
homeowner to be a permanent integral part
thereof, which will enhance its durability and
material value;
 Home Development Mutual Fund

5. Refinancing of an existing mortgage with an institution acceptable

to the Fund, provided that:
The loan is not in default within 12 months prior to the date of
application;
The said loan has a repayment history of at least two (2) years
with the original mortgagee
6. Combination of loan purposes, which shall be limited to the
following: Purchase of a fully developed lot not exceeding 1,000
square meters and construction of a residential unit thereon;
Purchase of a residential unit, whether old or new, with home
improvement;
Refinancing of an existing mortgage with home improvement;
Refinancing of an existing mortgage, specifically a lot loan, with
construction of a residential unit thereon.
 Multi-Purpose Loan Program

1. What is the Multi-Purpose Loan?

The Multi-Purpose Loan (MPL) is a cash loan under Pag-IBIGs
short-term loan program that aims to provide financial
assistance to qualified members for:
House Repair
Minor Home Improvement
Home Enhancement
Tuition/ Educational Expenses
Health and Wellness
Livelihood
Other purposes
 Multi-Purpose Loan Program

2. Who are eligible?

The loan is open to any Pag-IBIG member who:
Has made at least 24 monthly mandatory savings (MS)
Has 5 MS for the last 6 months prior to date of loan
application
If with an existing Housing Loan and/or MPL and/or
Calamity Loan, the account/s must not be in default prior to
loan application.
 Multi-Purpose Loan Program

3. How much can one borrow?

The borrowers loan value shall be a percentage of his Total
Accumulated Value (TAV), to wit:
No. of Monthly Savings Loan Value
24 59 months Up to 60% of Total
Accumulated Value (TAV)
60 119 months Up to 70% of TAV
At least 120 months Up to 80% of TAV
However, an eligible borrowers loan shall be limited to an amount for
which statutory deductions, monthly repayment of principal and
interest, and other obligations will render the borrowers net take home
pay to fall below the minimum requirement as prescribed by the
General Appropriations Act (GAA) or company policy, whichever is
applicable.
 Multi-Purpose Loan Program

4. How much is the interest rate?

The loan shall bear a nominal interest rate of 10.75% per
annum, paid equally for the duration of the loan.

5. What is the repayment period?

The loan shall be repaid over a maximum period of twenty-four
(24) months, with a grace period of two (2) months. Payments
must be remitted to Pag-IBIG on or before the 15th day of each
month starting on the 3rd month following the date on the
DV/Check.
 Multi-Purpose Loan Program

6. Will a member with an existing calamity loan still be allowed to avail of

an MPL?
Yes, provided the calamity loan is not in default. The MPL and
Calamity Loan programs shall be treated as separate and distinct from
each other. Hence, the member shall be allowed to avail an MPL while
he still has an outstanding calamity loan and vice versa. However, in
no way shall the aggregate loan exceed 80% of the borrowers TAV.

7. How can one pay his MPL?

The loan shall be paid in equal monthly payments, through:
Thru salary deduction for employed members; or
Over the counter; via- auto-debit arrangements with banks or
other modes the Fund may adopt, for self-employed/individual payors
 Multi-Purpose Loan Program

8. When can a member renew his MPL?

A qualified borrower may renew his/her MPL after making 6 monthly
amortizations. The proceeds of the new loan shall be net of the
outstanding balance of the existing loan.

9. How will the loan proceeds be released to the borrower?

The MPL shall be released through any of the following modes,
depending on the borrowers preference:
Disbursement Card, e.g. LBP Cash Card or Pag-IBIG Citi Prepaid
Card
Landbanks Payroll Credit Systems Validation (PACSVAL)
Check
or other similar modes of payment
 end