BFBANFIX

BANKING AND FINANCIAL INSTITUTIONS

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COURSE MATERIAL

Week No. 8
Topic Title GOVERNMENT NONBANK FINANCIAL INSTITUTIONS
Topic 1. To understand, and analyze the overall function of GSIS, SSS, PAG-IBIG
Learning and Pawnshop in the economy and to every working Filipino.
Outcomes

Prepared by:

Dr. Jay-Ar C. Dimaculangan, CHRP, AEPP, AWP

Ms. Redem Quinagoran, MBA

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Discussion / Lesson Proper:

Government Nonbank Financial Institutions

1.Government Service Insurance System

(GSIS)

The Government Service Insurance System. The

GSIS is a social insurance institution created
under Commonwealth Act No. 186 on
November 14, 1936. It provides and administers
a pension fund to secure the future of all
employees in the Philippine government which
has the following social security benefits:
compulsory life insurance, optional life
insurance, retirement benefits, and disability
benefits for work-related accidents and death
benefits. As mandated by Republic Act 696 or the Property Insurance Law, the GSIS also manages the
General Insurance Fund for the comprehensive protection to government insurable interests.

Meanwhile, the GISIS covers all government workers irrespective of their employment status except
members of the judiciary and Constitutional Commissions who are covered by separated retirement laws;
contractual employees who have no employee-employer relationship with their agencies; uniformed
members of the Armed Forces of the Philippines and the Philippine National Police, including the Bureau
of Jail Management and Penology and the Bureau of Fire Protection.

The GSIS provides services not only to its members but also their dependents and beneficiaries, the

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retirees and pensioners, and the survivors of deceased members or pensioners. Active members are
entitled to loan privileges such as salary, policy, emergency and housing loans.

Meanwhile, the GSIS introduced a legacy of innovations in 2003. It set in place a network of systems and
data that permits members to transact business with any GSIS office across the nation and an online
service that allows members to check all their GSIS accounts and records.

GSIS also opened a mobile phone texting facility for checking loan balances, maximum loan amount, and
status of loan applications. This is the first such service in all Asian bureaucracies. On the other hand, the
GSIS Identification Card was introduced. This card may be used by a member in transacting purchases
with department stores and any outlet allowing such transaction, and it shall also be the depository of
benefits and loan proceeds in real time.

Another breakthrough introduced by the GSIS was “e-GSIS”. This puts the System on the leading edge of
online delivery of services by government agencies. It is the first online service in the Philippine
bureaucracy that answers queries from live databases, and is programmed and expanded to include online
processing of loan applications submitted through the web. This can be accessed through the GSIS
website at www.gsis.gov.ph.

2. Social Security System

The SSS was created on September 1, 1957 by virtue of RA 1972. Section 2 of the SSS Law (Republic
Act No. 1161), as amended by the SSS Act of 1997 (Republic Act No. 8282) provides that, it is the policy
of the State to establish, develop, promote and perfect a sound and viable tax-exempt social security
system suitable to the needs of the people throughout the Philippines, which shall promote social justice
and provide meaningful protection to members and their beneficiaries against the hazards of disability,
sickness, maternity, old age, death and other contingencies resulting in loss of income or financial burden.

Aimed at streamlining, harmonizing and unifying existing identification systems used by government
agencies, the SSS joined the Unified Multi-Purpose Identification System (UMID) Project in May 2006.

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This was done through the issuance of a common reference number (CRN). This paved the way for a
Single Employer Registration Process initially started between SSS and Philippine Health Insurance
Corporation in May 2009

In a bid to reach out to its members worldwide, the SSS has its official website on the Internet with
www.sss.gov.ph as the address. This website serves the members’ access to convenient electronic service,
through which they can inquire, retrieve forms, and transmit feedback from their homes or offices any
time of the day.

Who can become a voluntary SSS member?

Any Filipino can become a voluntary SSS member – whether you’re working for the government, the
informal sector, or as an OFW. Because of the Kasambahay Law, employers of household service
workers are also required to pay for their house help’s SSS contributions. Even self-employed and
unemployed people and non-working spouses can become SSS members as long as they’re able to pay
their monthly dues. And once you become an SSS member, you’re a member for life.

Type of SSS Benefits

1.Sickness Benefit - It’s a daily cash allowance paid for the number of days a member is unable to work
due to sickness or injury. If you suddenly got sick or injured, you can get a daily cash allowance for the
number of days you’re unable to work. To avail of sickness benefits, you should be confined at home or
in a hospital for at least four days and have at least three months’ worth of contributions within the last 12
months

2.Maternity Benefit - It’s a daily cash allowance granted to a female member who is unable to work due
to childbirth or miscarriage. Female SSS members who recently gave birth or had a miscarriage can avail
of maternity benefits in the form of daily cash allowances. Again, you should have at least three months’
worth of SSS contributions within the last 12 months to receive this benefit

3. Disability Benefit - it’s a cash benefit granted – either as a monthly pension or a lump-sum amount –
to a member who becomes permanently disabled, either partially or totally. SSS members who became
either partially or totally disabled may apply for the disability benefit. It can be given either as a monthly
pension or a lump sum amount, depending on your monthly contributions.

4.Retirement Benefit - It’s a cash benefit granted – either as a monthly compensation or a lump-sum
amount – to a member who can no longer work due to old age. Also given either as a monthly pension or
lump sum amount, the retirement benefit is given to SSS members who can no longer work due to old
age. Those who are no longer working at 60 years old and contributed at least 120 monthly contributions

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before the semester of retirement can apply for a retirement benefit. It is automatically given to those who
reach mandatory retirement at 65 years old, regardless of employment status.

5.Death - It’s a cash benefit granted – either as a monthly compensation or lump-sum amount – to the
beneficiaries of a deceased member. You get a monthly death pension if you’re the primary beneficiary
(spouse and dependent children) of a deceased SSS member who had at least 36 monthly contributions.If
the contributions are lower than that, you get a lump sum. If there are no primary beneficiaries, the
secondary beneficiaries or dependent parents receive the lump sum.

6.Funeral - A funeral grant of P20,000 to whoever paid for the burial expenses of the deceased member.
If you paid the burial expenses of a deceased SSS member, you could apply to receive funeral benefits
from the SSS. The only requirement is to have at least one monthly contribution as a voluntary, self-
employed, or OFW member

7.Salary Loan -It’s a cash loan granted to an employed, currently – paying self-employed or voluntary
member. It is intended to meet the member’s short-term credit needs. The SSS salary loan is a cash loan
granted to any SSS member – including voluntary ones – to help them meet their short-term credit needs.
It has an interest rate of 10% per annum, and the length of loan payment depends on how many
contributions you’ve made.

To qualify for a salary loan, you should have posted at least six monthly contributions in the last 12
months before filing your loan application. You also shouldn’t have any existing loans with the SSS.

3.Home Development Mutual Fund (HDMF)

The birth of the Home Development Mutual Fund (HDMF),

more popularly known as the Pag-IBIG Fund, was an answer
to the need for a national savings program and an affordable
shelter financing for the Filipino worker. The Fund was
established on 11 June 1978 by virtue of Presidential Decree
No. 1530 primarily to address these two basics yet equally
important needs. Under the said law, there were two agencies
that administered the Fund. Today, HDMF is not only
intended for those rank-and-file employees in offices. It is
also open for our Kasambahay thru the Kasambahay
Program of Pag-Ibig.

4 Types of Pag-ibig Loan Programs

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1. Housing Loan - One of the most popular program benefit in the list of different Pag-Ibig loan is the
housing loan. Compared to banks and private lending companies, the Pag-Ibig housing loan offers the
longest payment period.

2. Multi-Purpose Loan - The MPL is a type of unsecured loan that banks are known to offer as personal
loan. The different purposes for which the MPL is used are tuition fee payment or educational expenses,
livelihood, health and wellness, minor home improvement, small amount emergencies, home
enhancement, medical needs and more.

3. Calamity Loan - This Pag-Ibig loan is intended for members affected by unexpected calamities like
fire, tropical cyclones or typhoon, flood, volcanic eruptions and other similar catastrophe.

4. Provident Benefit - This is not part of the Pag-Ibig loan programs. Instead, this is a benefit wherein
any qualified member of HDMF can avail to get a lump sum of their total contributions if the member
account has matured. Maturity of the fund is 20 years. There is also also new program the Pag-Ibig MP2
program that is more flexible and offers higher dividend rate compared to the MP1.The fund under this
program is the combined member contribution + employer contribution + the earnings or dividends
received on a yearly basis.

Pawsnshops

Pawnshops in the Philippines allow you to borrow money fast using your jewelry, gadgets, vehicles, or
appliances as collateral. The application is straightforward—you may need only a valid ID and your
collateral for a pawn loan. The process is also quick, and you can get your loan amount within hours.

There’s no denying it. The pawnshop industry in the Philippines is continuously growing, recording ₱96.9
billion in assets at the end of 2021, an increase of 4.7% from the previous year's ₱92.5
billion.[1] Sangla transactions also reached ₱54.5 billion at the end of 2021, proving that Filipinos turn to
pawnshops for short-term loans in times of cash emergencies.

Licensed Philippine-based pawnshops,are regulated by the Bangko Sentral ng Pilipinas (BSP) through the
Registration of Pawnshops and Money Service Business. This is to ensure the physical and financial
safety of all pawnshop customers. Aside from regulation, pawnshops also work with various
establishments to ensure that the items they accept aren’t stolen goods. Pawn brokers are trained to
identify their customers and keep records of the people they deal with.

In fact, all personnel in charge of pawnshops are screened and required to attend a seminar as per the
orders of the Anti-Money Laundering Council (AMLA). This is to ensure that they are knowledgeable
about customer identification, record keeping, and reporting of covered or suspicious transactions.
Pawnshops disregard age, style and brands when appraising jewelry. Instead, they pay attention to
the actual value of the item.

Assessment/Activities:

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Quiz/Seatwork
Research Work/Fieldwork
Recitation

References:

https://www.greenclimate.fund/ae/land-bank#projects

https://www.thebalance.com/what-is-a-commercial-bank-315196
https://www.studocu.com/ph/document/divine-word-college-of-san-jose/financial-accounting-and-
reporting/financial-intermediation/11852281

https://www.pdic.gov.ph/generalbankinglaw#sec3

https://www.studocu.com/ph/document/divine-word-college-of-san-jose/financial-accounting-and-
reporting/financial-intermediation/11852281
https://www.banksphilippines.com/2019/02/thrift-banks-in-the-philippines.html

https://www.bsp.gov.ph/Pages/Regulations/BankingLaws/RA7353.aspx
https://psa.gov.ph/sites/default/files/2011PY_Banking%2C%20Other%20Commercial%20Finance%20an
d%20Insurance.pdf

https://www.sec.gov.ph/investment-companies/about-investment-companies/

https://www.wallstreetmojo.com/investment-company/

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