City defaults in P7.1M GSIS loan policy review eyed

Several employees of the Local Government Unit of Dumaguete City failed to pay their loans before the Government Service Insurance System which ballooned to P 7.1 million in 2015. The city government is now revisiting loan policies in order to help employees retain a sizable take home pay.

Worse, some employees also failed to even pay mandatory contributions totalling P1.2 million also in 2015 in violation of the GSIS Act of 1997, that provides “that each government agency (city government) shall remit directly to the GSIS the employees’ and government agency’s contributions within the first ten (10) days of the month and shall also deduct from the fixed monthly compensation of the employee the loan amortizations due to GSIS.”

The State Auditors warn that the defaults could result in the imposition of surcharges and penalties as well as suspension of loan privileges and disqualification from receiving year-end dividends of employees.

In particular, COA revealed that the city did not deduct from the salary of 64 employees in January 2015 and 37 employees in December 2015 their contributions and loan amortizations.

Auditors reiterated the policy for the Treasurer to deduct from the salaries of the member employees all mandatory premium contributions and loan payments due to GSIS.

It was also found out that 5 employees were no longer in services yet were included in the GSIS billing.

The City Human Resource Management Officer explained that the net take home pay of the employees will be less than P 3, 000.00, the minimum requirement prescribed under the General Appropriations Act, if the City would deduct the GSIS dues.

Further query revealed that aside from the GSIS dues, the employees also contracted loans in their personal capacity from banks. But the COA team noted that amortization of personal loans through payroll deductions are unauthorized and must be discontinued. (By Dems Demecillo)

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