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Tomas Del Rosario College

Capitol Drive Balanga City Bataan


Bachelor of Science in Accountancy

Government Non-
Banking Financial
Institution
GSIS AND SSS
(Government Service Insurance System and Social Security System)

Dimapilis, Ada
Paguio, Kristine
Samaniego, Lenard
Villanueva, Dannica
Government Service Insurance System
Created by Commonwealth Act No. 186 and Republic Act No. 8291 (GSIS Act of 1997),
GSIS is a social insurance institution that provides a defined benefit scheme under the law. It
insures its members against the occurrence of certain contingencies in exchange for their monthly
premium contributions.
GSIS members are entitled to an array of social security benefits, such as life insurance
benefits, separation or retirement benefits, and disability benefits.GSIS is also the administrator of
the General Insurance Fund by virtue of RA 656 (Property Insurance Law). It provides insurance
coverage to government assets and properties that have government insurable interests.
It is not possible for non-government employees, self-employed or non-working persons
to become members of the GSIS. Instead, they are covered by the Social Security System (SSS).

Coverage
The GSIS covers all government workers except:
– Members of the Judiciary and Constitutional Commissions who are covered by separate
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.
Does not include: Barangay and Sanggunian officials who are not receiving fixed monthly
compensation (Source RIRR)
Does not include: Employees who do not have monthly regular hours of work and are not receiving
fixed monthly compensation (RIRR)

Poverty is a global problem. The Philippines has not been spared from the problems and
evils of poverty. Most of the Filipinos are poor, especially those who live in the rural areas where
disguise unemployment is dominant. And because of this the government has extended various
socio-economic programs for the poor on the basis of self-reliance. For those who are employed
in the government or in the private sector, or those who are self-employed, the government has
evolved a social security scheme for them. This refers to the Government Service Insurance
System (GSIS) and the Social Security System (SSS) which have been assigned the task of
protecting and improving the economic and social conditions of the workers.

The Philippines has not been spared from the problems and evils of poverty. Most of the
Filipinos are poor, especially those who live in the rural areas where disguise unemployment is
dominant. And because of this the government has extended various socio-economic programs for
the poor on the basis of self-reliance. For those who are employed in the government or in the
private sector, or those who are self-employed, the government has evolved a social security
scheme for them. This refers to the Government Service Insurance System (GSIS) and the Social
Security System (SSS) which have been assigned the task of protecting and improving the
economic and social conditions of the workers.

This chapter focusses on the various objectives, functions and programs/projects of GSIS
and SSS all government non-bank financial institutions. Considering their huge financial resources
and their essential socio-economic services to the people, they play very important roles not only
to the whole financial system but also to the national economy.

Social Insurance
Social security refers to a system of compulsory measures intended to protect the
individual and his family against the consequences of an unavoidable interruption of serious loss
of income for maintaining a reasonable standard of living. As an institution, social security is a
powerful tool of progress for both the people and the country it is not only a massive movement
to save the workers or employees from the hazards of life but it also greatly contribute to economic
development. Social security is compulsory in nature. A man becomes a member of the social
security system on the very day he is employed. And by operation of the law he is automatically
insured against the perils of death, disability, sickness, and old age. Benefits are extended to the
member of the moments the perils take place regardless of however the perils may have been
brought about.

Social security system is not governed by contact but by force of law. Social security has
not been intended to be the cure for all insurance needs, particularly in a less developed country
like ours. It cannot completely replace the lost income of the members, because the benefits that
can be derived on the minimal premium required under the scheme is not enough.
Social Insurance Programs may include:
 Pensions, social security systems, provident funds
 Health insurance
 Micro-insurance, small-farmer agricultural insurance, weather index based crop insurance
 Unemployment insurance

Social insurance is any government-sponsored program with the following four characteristics:
 the benefits, eligibility requirements and other aspects of the program are defined by statute
 explicit provision is made to account for the income and expenses (often through a trust
fund
 it is funded by taxes or premiums paid by (or on behalf of) participants (but additional
sources of funding may be provided as well)
 The program serves a defined population, and participation is either compulsory or so
heavily subsidized that most eligible individuals choose to participate.

Forerunners of Social Insurance


Social security came from the old tradition of helping the families of the deceased persons.
In those days, each time an individual died the members of the society contributed money for
burial expenses. This practice is still dominant in rural areas. This tradition has been transformed
by the governments of the developing countries into a philosophy of life for the betterment of life
of their peoples.

Main forerunners of social Insurance:


1. Holders of political power in society were rewarded for their good services. Rewards were
in the form of booty to the soldiers, lands and pensions to the veterans, widows, and
orphans of soldiers who died in wars.
2. Monasteries and the various religious orders were actively engaged in charitable and
humanitarian activities, such as redeeming slaves, helping the poor, the sick, and strangers,
protecting pilgrims, building bridges, and maintaining roads.
3. Funeral and sickness benefits societies had been known in ancient Greece, and these
became popular among the romans.
4. The city state of ancient Greece as well as the feudal states of Western Europe considered
it necessary to extend financial aid to their poor citizens.
5. In Germany, during the middle of the 16th century, the government compelled the
employees to contribute to the workers savings funds. During the second half of the 19 th
century, legislation on workmen’s compensation established the principle of employer’s
liability for accidents at work.

Present Concepts of Social Insurance


In recent years, the social security provisions have evolved more economic and social
functions. There has been a tendency to pup social security schemes partly based on insurance and
partly on government finance. The working member of society must not be abandoned once he
becomes unfit for employment. Society must manifest its gratitude to the worker for his productive
labor in the past. A member who enjoys an atmosphere of security for himself and his family is
more efficient in his job. This is not only good in society but also to the whole economy. This
simply means social and economic stability and growth.

The creation of the GSIS and SSS has promoted the growth of social security programs
for the benefits of government workers and employees. The introduction of the Medicare program
has expanded the social security measures for the poor.

Government Service Insurance System


GSIS started its operation on May 31, 1937. It had an initial capital of 200,000 for
operating expenses and a personal force of fifty employees. Based on its 2017 records, GSIS had
total assets of Php1.09 trillion and had 42 branch offices, 14 extension offices nationwide, and 58
service desks.
During its early operations, GSIS was entrusted first with the administration of a life
Insurance Fund. It then extended life insurance coverage and benefits to government employees
in the country. At present, GSIS also administers, including the Life Insurance Fund, the following:
 Retirement Insurance Fund
 Health Insurance Fund/Medicare
 State Insurance Fund/Employee’s Compensation
 General Insurance Fund/Property Insurance
 Barangay Officials Life Insurance Fund

Over the years, the system has made a great impact on the social and economic life of the
country. It has provided social insurance and security benefits to government workers, and that it
has supported financially a wide range of economic development projects, both government and
private. However, the role of GSIS in economic development is only secondary to its primary
mission of service to its members. In this connection, it has continued to expand its operations and
services to its members.
Objectives
1. To promote efficiency and welfare of government employees.
2. To help the Filipino government employee when he cannot or can no longer help himself
or his family.
3. To pay out any and all rightful insurance claims to its policy holders when these are due.

Organizational Structure
On top of the organizational structure is the board of trustees. It is composed of the
president and general manager and seven other members appointed by the President of the
Philippines, three of whom represent three leading organizations or associations of government
employees. The board exercises corporate powers and functions of the system.
The president and general manager is the chief executive officer of the system. A senior
vice-president assist him in each major area of activity/responsibility. He appoints all senior and
junior officers to help him run the system. Auditing services are availed of from the Commission
on Audit. The chairman of the Commission on Audit is the ex-officio auditor of the system.
Likewise, legal services come from the Office of the Government Corporate Counsel.
The major organizational units or groups are the following:
 Office of the Board of Trustees
 Office of the President and General Manager
 Actuarial Research and Development Group
 Information Systems Group
 Finance Group
 Legal and administrative Group
 Social Insurance Group
 Loans and Investment Group
 General Insurance Group
 Branch Offices Group

FUCNTIONS
1. Primary functions – Social insurance in the form of:
 Life Insurance Benefits
 Retirement Benefits
 Disability Benefits
 Medicare Benefits
 Survivors’ Benefits
2. Secondary functions – Financial assistance to GSIS members:
 Policy Loans
 Salary Loans
 Educational Assistance Loans
 Fly-PAL pay-later Loans
 Sale of Housing Units
3. Supportive functions – Engaging in other businesses like:
 Investment in loans (housing and real estate)
 Investment in stocks, bonds, treasury, and promissory notes and more secure
instruments such as government and private securities and money market
placements
 Production and sale of non-compulsory insurance policies
 General insurance and reinsurance businesses
LIST OF GSIS BENEFITS IN THE PHILIPPINES
1. Retirement benefits:
Maybe you’re wondering too why you are being deducted every month for your
GSIS. It is like investing every month. Your GSIS contributions will accumulate and
appreciate in value that is why you are receiving dividends when the board made them
available depending on the revenue the whole GSIS has earned. You will also be entitled
to retirement or pension benefits in the future. The following are the types of retirement
plans offered to GSIS members:
 Retirement under RA 8291 (5 year lump sum cash payment or instant pension
+ monthly pension for life) – this is the most common type of retirement plan
and pension chosen by many government retirees in the Philippines because
you will get a lump sum amount of money and monthly pension for life. It has
2 options when you avail. To qualify for this retirement plan, you must have
rendered at least 15 years of service and must be at least 60 years old upon
retirement. Your last 3 years of service must also be continuous.
 Retirement under RA 660 a.k.a. Magic 87 (annuity + lifetime pension) – if your
age + years of service = 87, then you can avail of this retirement plan. It offers
3 options: automatic pension, initial 3-year lump sum and 5-year lump sum.
 Retirement under RA 1616 (refund all your GSIS premiums + gratuity payment
from employer) – under this option, you must have rendered at least 20 years
of service regardless of age and employment status
 Portability Law RA 7699 (Combine your GSIS + SSS CYS) you have the
option to combine both your GSIS and SSS creditable years of service to qualify
for retirement programs offered by both pension funds
 Retirement under Presidential Decree 1146 (Basic monthly Pension or Cash
Payment) – this retirement plan is for those who have been working in the
government after May 31, 1977 but before June 24, 1997. You have the option
if you want to receive pension every month and cash payment.
2. GSIS Survivorship Benefits:
These are cash and/or pension benefits provided for the surviving legal spouse (as
long as he/she doesn’t remarry), dependent minor children, or incapacitated beneficiary,
when a member or a pensioner dies.

3. GSIS Loans Benefits


Members of the GSIS also have available loans benefits. However, loans are still
loans so I don’t suggest anyone to avail them unless they really need it badly. Loans bear
interests payables. Focus on income bearing investments, not loans.

4. Consolidated Loan
Is also known as Conso-Loan. It is a consolidation of 5 loans into 1 – Salary Loan,
Restructured Salary Loan, Enhanced Salary Loan, Emergency Loan Assistance, and
Summer One-month Salary Loan.

5. Policy Loan
Since every member in the GSIS is covered with life insurance policy
automatically, you also have this policy loan benefit. You can apply for this loan if you
have been insured at least one year provided you have updated premium payments and has
an active policy.

6. Emergency Loan
This kind of loan is so special because not everyone can avail of this. You have to
be a resident of a declared calamity area before you can avail emergency loan. Your place
must be declared under “State of Calamity” by the city council and approved by the GSIS
Board of Trustees.

7. GSIS Burial Benefit


Burial benefits are funeral benefits given to GSIS retiree’s survivors or any person
who shouldered the funeral expenses of the deceased GSIS member.
8. GSIS Disability Benefit
These are benefits resulting from disability or incapacity to work because of
physical or mental injury, impairment or disease. GSIS assigns medical evaluator for
members who avail disability benefits.

9. GSIS EC Benefits

It is also known as Employee’s Compensation benefit. It is another disability benefit


provided for public and private sector workers and their dependents in the event of work-
related injury, sickness, disability or death.

10. GSIS Housing


Their acquired assets are available for cash basis and “as is where is” policy for
interested members

11. GSIS Insurance Products


GSIS also offers very cheap insurance products such as personal accident insurance
coverage, fire, comprehensive insurance for vehicles, and other traditional insurance
products like aviation, bonds, property floater, marine cargo and marine haul.
12. GSIS Scholarship

The Government Service Insurance System also offers scholarship program every
academic year for children of low-income GSIS members. The selected qualified scholars
will receive up to P 200,000 tuition and miscellaneous fees per semester plus monthly
allowance of P2000.

Monthly Contributions

Section 11 of the Revised Implementing Rules and Regulations of RA 8291


approved on June 23, 2010 under Board Resolution No. 88 provides that the rate of
contribution payable by the member and the government agency shall be nine (9) per cent
and 12 per cent, respectively, based on the actual monthly salary of the member.

Special members that include constitutional commissioners, members of the judiciary and
those with equivalent ranks are required by law to remit to the System, three (3) per cent of their
regular monthly compensation for both employees’ and government agency’s share as life
insurance premiums to answer for their life insurance benefits defined under RA 8291.

Social Security System


The Philippine Social Security System (SSS) is a social insurance program for employees
in the Philippines. Founded in 1957, the SSS is a government agency that provides retirement and
health benefits to all paid up employees in the Philippines. Members of the SSS can also make
‘salary’ or ‘calamity’ loans. Salary loans depend on the monthly salary of the employee. Calamity
loans are for such times when there is a calamity that has been so declared by the government, in
the area where the SSS member lives, such as flooding, earthquake and natural disasters.
Philippine Federal Government Employees don’t contribute to SSS instead they have their
own agency called the Government Service Insurance System or GSIS.

Nearly every working Filipino in the private sector contributes monthly to the SSS or the
Social Security System fund, but not everyone understands the benefits they qualify for, nor how
the system works. It is an insurance program mandated by the Philippine government to cover all
income earners or workers in the private sector, in contrast, government workers are covered by
the GSIS or Government Service Insurance System.

The Philippine Social Security System or Paseguruhan ng Kapanatagang Panlipunan is a


state-run, social insurance program in the Philippines to workers in the private, professional and
informal sectors. SSS is established by virtue of Republic Act No.1161, better known as the Social
Security Act of 1954. This law was later amended by Republic Act No. 8282 in 1997.

SSS started its operations on September 1, 1957 with 211 personnel and assets of P6,372.
There were 224,156 workers as member. Initially, SSS granted only death, disability, sickness,
and old-age benefits under its program for the workers/employees in the private sector. Over the
years, as it s capacity for funding and administrative experience grew, additional benefits have
been incorporated into the scheme, namely, hospitalization, benefits under the Medicare program,
employees’ compensation benefits and maternity benefits.

Today, SSS provides seven out of the nine benefits endorsed by the International Social
Security Association (ISSA), an organization of social security institutions of more than 100
countries. Family allowance and unemployment insurance are the other benefits which are not yet
implemented in our country.
As of 2016 SSS asset grew to P474.7 billion and served 34.2 million members. It had ten
regional and sixty provincial offices.

SSS Administration
The SSS is under the general supervision of the Social Security Commission composed of
Secretary of Labor and Employment, the SSS administrator, and six appointed members from the
labor group, management group, and the general public. The chairman is designated by the
President of the Philippines. All members are appointed by the President of the Philippines.

The general conduct of the operation and management functions of the SSS is vested in the
administrator. He is the chief executive officer and he is responsible for carrying out the program
of the Social Security System and the policies of the Social Securities Commission.

Types of Coverage
1. Compulsory Coverage
a. For all employers whether natural or juridical, domestic or foreign, who carry on in
the Philippines any trade, business, industry, undertaking or activity of any kind
and use the services of another person.
b. For employees in the private sector who are not yet sixty-one years old, regardless
of citizenship, nature, and duration of employment and manner of payment or
source of compensation.
c. For all self-employed persons who are not yet sixty-one years old with an annual
gross income of at least P1,800 and belonging to any of the following groups:
c.1) Members of the Philippine Bar and professionals duly licensed by the
PRC
c.2) Business partners, ‘single’ proprietors, and board directors duly
registered with the appropriate government agencies.
c.3) Actors, actresses, directors, script writers, recording artists, dancers,
singers or musicians, and free-lance movie cameramen, production men, makeup
artists, graphic artist, sound effects men, film editors and bit players
c.4) Free-lance writers, journalists, newscasters and news correspondents.
c.5) Professional athletes, coaches, trainers, and referees licensed by the
Games and Amusements Board as well as jockeys and trainers licensed by the
Philippine Racing Commission.
c.6) Real estate brokers, salesmen, sales brokers, real estate agents,
appraisers, and consultants registered with the Bureau of Domestic Trade or any
other appropriate agency.
c.7) Actuaries, insurance agents, and brokers registered with the Insurance
Commission.
c.8) Other Groups of self-employed persons as may be determined by the
Social Security Commission from time to time.

2. Voluntary Coverage
a. For any Foreign government, international, governmental organization employing
workers In the Philippines or employing Filipinos outside the Philippines who enter into an
agreement with the Philippine Government for the inclusion of such employees in the SSS except
those already covered by their respective civil service retirement system.
b. For Filipinos recruited in the Philippines by foreign based employers for employment
abroad.
Benefits of SSS
1. Sickness benefit
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. A member is entitled to 120 days in one calendar
year but not exceeding 240 days on account of the same 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.

2. Maternity benefit
The maternity benefit is a daily cash allowance granted to a female member who
was unable to work due to childbirth or miscarriage, for a period of 60 days due
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.
3. Disability benefit
Cash benefits are paid to a member who becomes totally or partially disabled. A
monthly pension is granted to a member who suffers permanent, total or partial disability,
and who has paid at least thirty six monthly contributions before the semester of disability
Upon the death of a permanently total disability pensioner, his primary
beneficiaries-legitimate and dependent spouse and minor children- will be entitled to 80%
of his monthly pension.
Another type of benefit is the dependents' pension. This is granted to each of the
five dependent children of a permanent total disability pensioner beginning with the
youngest and without substitution, equivalent to 10 % of the monthly pension. The pension
will be suspended if the dependent child reaches age 21, gets married, gets employed and
earns P300 or more a month, or dies.

4. Retirement benefits
Cash benefits are paid to a member who, due to old age, is no his ability to earn a living
is diminished. A member is entitled to a monthly pension if He is sixty five years old and has
paid at least 120 monthly contribution before the semester of retirement.

The monthly pension is for life. Upon the death of the old-age pensioner, his primary
beneficiaries will be entitled to 80% of his monthly pension. Minimum monthly pension is
P1,200. A lump sum amount is granted to a member who is sixty years old or over, separated
from employment, has paid less than 120 monthly contributions and is not voluntarily paying
contributions. The amount of lump sum benefit is equivalent to the total contributions paid by
him and his employer on his behalf plus 6% interest thereon from the day he qualifies.

5. Death Benefit
It is a cash benefit either in monthly pension or lump sum paid to the beneficiaries
of a deceased member.
The primary beneficiaries who will be assisted with this is the legal spouse, and
the member's children (legitimate or illegitimate under 21 years old). If there are
no primary beneficiaries, the secondary beneficiaries will be given the lump-sum amount,
which in this case would be the member's dependent parents.
To qualify for pension and lump-sum amount, 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 Lump-sum 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 beneficiaries are granted the death benefit
in lump-sum amount.

6. Funeral Benefit
It is a cash benefit of P20,000 to P40,000, and will be given to whoever pays the
burial expenses of the deceased member or pensioner.
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.

Service Loan
1. Salary Loan this is a short term credit needs. The amount of loan is based on the salary
and it is payable within one year and twelve monthly installment to be remitted by the
employers every quarter.
SSS members with at least 36 monthly contributions can borrow an amount
equal to their one-month salary up to P15,000. Those with at least 72 monthly
contributions are entitled to a two-month loan worth twice their salary up to P30,000.
Who may qualify in the SSS Salary loan
Who may qualified for salary loan
 All currently employed, currently contributing self-employed or voluntary member.
 For a one-month loan, the member-borrower must have thirty six
(36) posted monthly contributions, six (6) of which should be within
the last twelve (12) months prior to the month of filing of
application.
 For a two-month loan, the member-borrower must have seventy
two (72) posted monthly contributions, six (6) of which should be
within the last twelve (12) months prior to the month of filing of
application.
 The member-borrower whose employer must be updated in the payment of
contributions.
 The member-borrower has not been granted final benefit, total permanent
disability, retirement and death
 The member-borrower must be under sixty-five (65) years of age at the time of
application

Even if you meet these requirements, you might be disqualified from the SSS loan if
your employer isn’t remitting your SSS contributions on time. In addition, an SSS loan
applicant may not be approved if he is over 65 years old, has received final benefits (e.g.,
retirement, total permanent disability, etc.), and has committed fraud against SSS.

2. Educational Loan
This program has a set budget only in which limited numbers only can be
accommodated in the program. According to SSS, interested applicant to the SSS
Educational Loan Program can still apply however they will be waiting for other slots to
be freed up (i.e. prior beneficiaries have already graduated and payment for the Education
Loan has started)

Who may qualify in the SSS Educational Loan?


The SSS member should:
1. Have an actual monthly salary that is not more than 25,000 pesos per month.
2. Has a last SSS monthly salary credit is 15,000 pesos or lower.
3. Have paid at least 12 monthly contributions.
4. Have paid the monthly contribution for at least 1 of the past 3 months.
5. Not delinquent in his/her outstanding SSS housing loan or salary loan.

Degree Course – Maximum of Php20,000 per semester/trimester/quarter term or full


amount tuition/miscellaneous fees, whichever is lower,
Vocational/Technical Course (minimum of 2 years) – Maximum of Php10,000 per
semester/trimester or full amount of tuition/miscellaneous fees, whichever is lower.

Employed members
It is important that you are aware of the payment deadlines for contributions and
member loans in order to avoid incurring penalties. If you are an employee-member, your
employer must pay your contributions and member loans monthly in accordance with the
prescribed schedule of payment which is according to the 10th digit of the Employer’s ID
Number. Late payments will result to penalties and delays in the processing of your benefits
and loans.

Self-employed and Voluntary members


If you are a self-employed or a voluntary member, the prescribed schedule of
payment is also being followed, (depending on the 10th (last digit) of the SE/VM SS
number). However, the frequency of contribution payments for self-employed or a
voluntary member can be on a monthly or quarterly basis. A quarter covers three (3)
consecutive calendar months ending on the last day of March, June, September and
December. Any payment for one, two or all months for a calendar quarter may be made.

Membership for life


An employee/self-employed person once reported to the SSS for coverage become
a covered member and remain so far as long as he lives. In the event that a member is
separated from employment or, if he is a self-employed person, realized no earnings in a
given year, he is no longer required to pay SSS contribution. However he is entitled to the
benefits and loan privileges granted as long as he meets the qualification