Law Summary
Interest Rate on Conso-Loan
- The money placed in the Conso-Loan will yield a rate of return of 12%.
- This rate is higher than the 5-year Treasury Bond coupon rate of 7.25%, indicating a more favorable return for the GSIS.
Revised Loan Amounts Based on Record of Creditable Services
- The loanable amounts have been categorized according to the borrower's length of service:
- Less than 20 months: Previously P10,000; now no loanable amount.
- Greater than 20 months: Previously 1 BMS + P10,000; now 3 BMS.
- Greater than 40 months: Previously 2 BMS + P10,000; now 4 BMS.
- Greater than 5 years: Previously 5 BMS + P10,000; now 7 BMS.
- Greater than 10 years: Previously 8 BMS + P10,000; now 10 BMS.
- Greater than 15 years: Previously 8 BMS + P15,000; now 10 BMS.
Implementation and Approval
- The resolution was adopted during the GSIS Board Meeting No. 23 on December 20, 2006.
- The increase aims to provide GSIS members with greater borrowing capacity based on their length of service and salary.
Key Legal and Financial Concepts
- Basic Monthly Salary (BMS) serves as the basis for calculating loanable amounts.
- Loanable amounts are adjusted to better align with members’ service credits and salary.
- The rate of return established assures GSIS of reasonable investment earnings from the loan program.
- Amendments replace previous fixed sum increments with a more scalable and salary-linked approach.