State-owned pension fund Government Service Insurance System (GSIS) on Monday waived P7.7 billion worth of surcharges and penalties previously added to the loans that government workers have not paid on time.
 
According to GSIS president and general manager Winston Garcia, the condonation was an offshoot of President Gloria Arroyo's directive by for the pension fund manager to implement a program that would ease the financial burden of its members.
 
"President Arroyo wants GSIS members to get a clean slate in their loan accounts," Garcia said in a statement.

Government workers, who are GSIS members, could avail of various loans from the state-owned pension fund. But when they fail to pay their loan arrears for seven months, their loans are considered in default, trigerring an automatic computation of pro-rated surcharges and penalties. These charges, which are supposed to disuade the borrowers from defaulting on their loans , are added to the interest payables.

With the condonation, Garcia said GSIS members, who defaulted on their loans, could now avail of other GSIS benefits, which they would usually not be entitled to.

GSIS does not disclose how much loans in its total loan portfolio is in default. Loan arrears of most member loans are automatically deducted from their salaries.
 
In 2007, GSIS granted P54.63 billion loans to its members through the eCard-plus facility. This was 63.8 percent higher than the P33.32 billion loans granted the previous year.

About 447,316 GSIS members availed P38.82 billion through the pension fund’s Consolidated Loan (Conso-Loan) in 2007.
 
The Conso-Loan is a loan window that consolidated five different loan packages including Salary Loan, Restructured Salary Loan, Enhanced Salary Loan, Emergency Loan Assistance, and Summer One-Month Salary Loan into one.

The repayment period for the Conso-Loan is stretched to six years, with the outstanding penalties and surcharges of the previous loans condoned.
 
Likewise, the GSIS also extended P7.25 billion worth of regular and optional policy loans to 362,961 members in 2007. It also disbursed P4.65 billion through the P10,000 cash advance facility to members who are enrolled under the eCard Plus.
 
Earlier, the GSIS Board of Trustees approved another round of pension increase for its old-age and disability pensioners bringing the average monthly benefits to P7,800 from P7,200.
 
Loan condonations, if substantial, usually result in lower earnings projection. Garcia, however, said GSIS is on its way to breaching its P50-billion earnings target this year despite the onslaught of the financial turmoil in the United States.

In 2007, GSIS's net earnings reached P41.3 billion.