Guidelines and Procedures in the Implementation of Memorandum Circular 2016-038 with Subject "Uniform Rules on Automatic Salary and Pension Deductions"

December 9, 2016

PNP STANDARD OPERATING PROCEDURE NO. 002-16

GUIDELINES AND PROCEDURES IN THE IMPLEMENTATION OF MEMORANDUM CIRCULAR 2016-038 WITH SUBJECT "UNIFORM RULES ON AUTOMATIC SALARY AND PENSION DEDUCTIONS"

1. REFERENCE:

PNP Memorandum Circular (MC) Number 2016-038 dated June 27, 2016 with Subject: "Uniform Rules on Automatic Salary and Pension Deductions".

2. PURPOSE:

This Standard Operating Procedure (SOP) provides guidelines and procedures in the implementation of Automatic Pension Deduction Scheme (APDS) for loans contracted by PNP pensioners, and other deductions that the pensioners may avail from accredited Financial Institutions (FIs).

3. OBJECTIVES:

a. To provide orderly procedures in the implementation of APDS pursuant to PNP MC 2016-038 particularly Section 6 (Uniform Rules), Section b (Automatic Pension Deduction) No. 2 (Loans Contracted after Retirement);

b. To provide a systematic and automated means of processing of deductions, ensuring correct deductions and to avoid the occurrence of under deduction; and

c. To provide efficient service to PNP pensioners and FIs in the collection of deductions and remittances to concerned stakeholders through the use of the Pension Deduction Loan Information System (PDLIS).

4. SCOPE:

These guidelines and procedures shall apply or govern the following transactions:

a. Loan contracted by retired PNP personnel, survivor, and transferee;

b. Savings/capital contribution by PNP pensioners with accredited FIs;

c. The remittance of any collected amount to the accredited FIs;

d. The collection of System Administrative Fees from the FIs.

5. DEFINITION OF TERMS:

a. Pension Deduction Loan Information System (PDLIS) — refers to the online system to be used for the implementation of Automatic Pension Deduction Scheme. aTHCSE

b. Authority for Pension Deduction (APD) — refers to the document executed by a retired PNP personnel authorizing the PNP to make deductions from his retirement benefits in favor of any accredited Financial Institution.

c. Committee on Accreditation and Automatic Deduction (CAAD) — refers to the committee that is mandated to accredit the different FIs in the PNP Automatic Salary and Pension Deduction.

d. Cooperatives — refer to PNP accredited cooperatives authorized under Republic Act No. 6938, organized and managed by government employees for their benefit and welfare.

e. Financial Institutions (FIs) — refer to the PNP accredited Non-Stock Savings and Loan Association, Inc. (NSSLAIs) as provided under RA No. 8367 and Cooperatives as provided under RA No. 6938 and the Provident Fund created under EO 641.

f. FS — refers to the PNP Finance Service.

g. Loan Release Voucher — refers to the document processed by FIs containing details such as the principal amount, interest, surcharges and date of loan granted duly signed and acknowledged by the pensioner/borrower.

h. Non-Stock Savings and Loan Associations (NSSLAIs) — refer to PNP accredited NSSLAIs pursuant to Republic Act No. 8367 providing savings and loan services to PNP members.

i. Outstanding Loans — refer to the remaining principal balance of the loan upon the effectivity of the retirement of the PNP personnel.

j. Pension — refers to the monthly specified cash amount that a PNP member will receive upon retirement or when considered as a case of permanent total disability.

k. PNP Pensioner — refers to a person who may either be a retiree, transferee, or survivor. An outright pensioner refers to a PNP personnel who opted to avail of the monthly pension upon retirement instead of lumpsum.

l. PRBS — refers to the PNP Retirement and Benefits Administration Service which main function is to administer the retirement and separation benefits of all PNP personnel and as well as the implementation of plans and programs, to uplift the morale and welfare of all PNP retirees and their survivors.

m. Remittance Voucher — refers to a document prepared by PRBS as basis of FS for processing and subsequent issuance of check in favor of accredited FIs for payment of loan or remittance of their savings acquired by PNP personnel while still in active service.

n. Retiree — refers to a regular PNP uniformed personnel who either optionally or mandatorily retired from the police service.

o. Survivors — refer to the beneficiaries of a PNP personnel who died while in the active police service.

p. System Administration Fee (SAF) — refers to the cost to support PNP activities such as the upkeep of records, maintenance, configuration and reliable operation of computer system used in the processing of the automatic pension deduction.

q. Transfer of Loan — FS shall treat this as a simple stoppage of an existing loan with the losing creditor where the loan was fully settled and as a new loan for the gaining creditor where the personnel applied for transfer of the old loan.

r. Transferee — refers to a beneficiary of a deceased PNP retiree.

6. GENERAL PROVISIONS:

a. General Guidelines:

1) The Net Take Home Pension shall be Six Hundred Fifty pesos (P650.00) per month.

2) For payment of Obligation contracted after implementation of the PDLIS and the retirement of the PNP personnel, deduction shall be based on the date of reservation in the PDLIS (which must be consistent with the date of loan and date of signing of the APD by the PNP retiree).

3) Requirements to support deduction from monthly pension:

a. Duly notarized Authority for Pension Deduction (APD) (See Annex "A" for uniformity); and

b. Loan release voucher. (for loan only)

4) It shall be the responsibility of the FIs to validate all the entries and the authenticity of the required documents attached/submitted for reservation in the PDLIS. FI which will be found to violate this provision shall be penalized under the provisions of the MOA between the PNP and the FI.

5) The PNP will honor the APDS deductions of Loan Obligations contracted after the signing of this SOP. For loans contracted prior to signing of this SOP, collection of these obligations shall remain solely the responsibility of the FI.

6) The PNP through the Accounting Division, DC shall deduct the System Administration Fee (SAF) from the FI's collection based on the MOA signed by the PNP and the FI. The SAF shall be deposited in an account to be opened in a government servicing bank. Utilization of funds shall be strictly observed based on government accounting and auditing rules and procedures. It shall not be charged or passed on by the FIs to the PNP pensioners as stipulated in the MOA between the PNP and FIs. cAaDHT

7) The PNP shall not be faulted for penalties and charges for stoppage of loan deductions as a result of implementation of forfeiture of pension in favor of the government or court order.

b. Specific Guidelines:

1) Committee on Accreditation and Automatic Deduction (CAAD)

a. CAAD to assess applications for the APDS and subsequently prepare a MOA to be signed by accredited FIs; and

b. CAAD shall furnish FS with the list of accredited FIs and approved number of deduction codes.

2) Financial Institutions

a) FIs shall submit to CAAD copy furnished FS the following:

1. List of PNP pensioners availing the services of LBP for collection of loan payment including the principal amount of loan contracted, amount of monthly amortization, and the principal loan balance.

2. List of PNP Pensioners with existing principal balances of loans availed while in the active service.

i. Such list shall be verified prior to uploading in the PDLIS for tagging. This list will be a one-time submission; and

ii. For loan deductions after the implementation of the PDLIS, the FI should strictly verify all APD forms. If there is no APD form and loan release voucher attached to the system, the system will not honor the transaction.

3) PRBS:

a) Upon release of Retirement Benefits, and if there is still an existing loan balance, the PRBS shall encode in the PDLIS the following data:

i. Pension Account Number (if applicable)

ii. ATM Account Number

iii. Name of Retiree

iv. Remaining Principal Loan Balance

v. Pension Allotment

vi. Date of Expected First Pension

vii. Date of Retirement

This data will be used as basis for the deduction from the retiree's first monthly pension.

b) Upon release of the first monthly pension, the PRBS, after the implementation date of the PDLIS, shall regularly submit to FS every 25th day of the month the following:

i. List of updated PNP pensioners.

ii. Report of Pensioners with outstanding loan balance after release of Retirement Benefits:

 This refers to the list of retired PNP personnel whose retirement benefit was insufficient to fully pay their outstanding principal loan balance. The monthly amortization to be deducted from the pension through the PDLIS shall be based on the submitted APD presented by the FIs during the processing of Retirement Benefits signed by the pensioner allowing deduction from his/her monthly amortization based on the Promissory Note he/she signed.

iii. Report of Deleted Pensioners:

iii.a. Names of deleted PNP pensioners including the reason for the deletion. The Report of Deleted Pensioners will be used as basis of FS to stop any monthly remittance to the FIs. FS will subsequently inform the FIs of the stoppage made.

iii.b. Based on the PNP Pension Master File, PNP pensioners with forfeiture of monthly pension in favor of the government due to penalties from the active service shall be implemented by PRBS. Implementation of forfeiture of pension shall take into consideration the net-pension-pay (NPP) such that if the NPP is not sufficient to cover the total amount to be forfeited, deduction will be on installment basis. HCaDIS

4) Finance Service:

a) FS to issue deduction codes to accredited FIs based on approval of CAAD.

b) FS shall validate the list of deleted PNP pensioners submitted by PRBS.

i. To verify if on the date after the death of the pensioner, an amount was still forwarded to any FI. If it was verified that an amount was still forwarded to the FI after the death of a pensioner, FS shall prepare the cancellation report to be submitted to the Accounting Division (AD), Directorate for Comptrollership (DC) copy furnished PRBS.

ii. AD, DC in turn shall effect any adjustment in the remittance voucher of FIs based on the cancellation report submitted by FS.

c) FS shall be responsible in the preparation/processing of the Disbursement Voucher for the payment of monthly pension every 16th day of the month and the collected amount authorized by the pensioner in favor of the FIs.

d) FS reserves the right to deny or hold the implementation of a loan deduction encoded by FIs in the PDLIS for valid reasons provided there is proper documentation. The concerned FI shall be informed accordingly and shall be given a chance to explain.

7. n  THE APDS through the PDLIS

a. Implementation of the APDS through PDLIS:

a) Enrollment of all authorized Users and generation of their Username and Password.

a) PRBS Encoder

b) PRBS Approver

c) FS Supervisor

d) FS Verifier

e) FS Approvers

f) FS Processor/s

g) FI Authorized Users based on list

h) System Administrator/s

b. Transactions that shall be processed in the PDLIS:

1) Encoding and processing of deductions covering

a) New loans;

b) Loan renewals;

c) Transfer of Loan; and

d) Balance of unpaid loans from active service.

2) Stoppage of loan deductions (full payment);

3) Encoding and processing of deposit/investment deductions;

4) Attachment of the APD Form and Loan Release Voucher with encoding of the deduction requested by FIs.

5) Report Generation

a) Breakdown of Deduction per deduction type

b) Collection List per FI

c) Remittance Report per FI

d) Alphalist of Pensioner — downloadable in Excel Format

e) LBP Credit Account Report

f) Added/Updated/Removed Report

g) Billing Report

h) Funding Warrant

i) Registry

  A system audit shall be conducted on a regular basis, or as recommended by the Director, FS. The system will also have an audit trail to determine the users who accessed the system on specific dates and time. Likewise, it shall have a counter to determine the number of times the users have accessed the System. AHCETa

  FS may request and/or recommend to the CAAD the suspension or revocation of the MOA of the concerned FI for valid reasons, such as those that affect the proper implementation and security of the system. Consequently, the concerned FI's authority to access the PDLIS shall be suspended or permanently cancelled. FS shall submit a report to the CAAD for their information, reference, and/or appropriate action.

c. Loan Transaction through PDLIS: (See attached Flow Chart Annex "B")

1. PNP pensioner who wants to apply for a loan may proceed directly to the accredited FIs of his own choice located at any branch nationwide and personally accomplish the loan application required by FIs.

2. FI shall perform the following:

a) FIs authorized user shall assess the capacity to pay of the pensioner applying for loan by viewing in the PDLIS the details of his/her monthly pension;

b) Shall require the pensioner to submit the duly notarized signed APD;

c) Shall process the loan application of the pensioner and once approved, FI shall release to the borrower the amount of loan contracted; and

d) Shall issue a copy of loan release voucher to the pensioner.

3. PNP pensioner shall affix his/her signature in the loan release voucher as proof of receipt.

d. Billing process using the PDLIS: (See attached Flow Chart Annex "C")

ii. n  After the loan has been released by accredited FIs to the pensioner/borrower, FI shall perform the following:

a) FIs authorized user shall carefully encode the transaction details in the PDLIS; and

b) Shall upload in the system the clear scanned APD and loan release voucher as proof of transaction.

iii. FS authorized verifier shall perform the following:

a. Validate the amount encoded in the system by the FIs authorized user against the amount reflected in the APD and loan release voucher;

b. Ensure that the content of the clear scanned APD and loan release voucher has all the required details such as the signature of the pensioner availing for loan, principal loan amount contracted, monthly loan amortization, amount of interest etc.;

c. Notify FIs thru their official email account and in the journal menu in the PDLIS any discrepancy noted in the transaction, e.g., no APD attached, amount of monthly amortization encoded in the system is different from the amount in the APD etc.; and

d. Click the validate button in the PDLIS as a signal to FS approver that there's a transaction for his/her action.

iv. FS authorized Approver shall perform the following:

a. Recheck the transaction validated by FS verifier;

b. Notify FIs thru their official email account and in the journal menu in the PDLIS any discrepancy noted in the transaction, e.g., no APD attached, amount of monthly amortization encoded in the system is different from the amount in the APD, etc.

c. Click the approve button in the PDLIS if no discrepancy was noted in the transaction. This final action of FS approver signifies that loan deduction from the pensioner monthly pension was successfully implemented in the PDLIS and the system will automatically generate the billing report. ScHADI

8. Responsibilities of Users in the PDLIS

a. GENERAL RESPONSIBILITY

1) All Users of the System shall be provided with a Username and Password. Sharing of one's Username and Password is strictly prohibited. The PNP shall not be liable for consequences that may arise due to the user's violation of this policy.

2) All Users shall adhere to the policies set in this circular and other applicable rules and/or existing PNP directives.

b. PNP PENSIONERS

1) PNP pensioners shall have their own default username (first letter of their name, middle initial, last name and last three digit of their Pension Account No.) e.g., for Juan Go Garcia his default password should be jggarcia396 and alphanumeric format for default password (birthdate ddmmyyy) e.g., 05nov1965 in order to view/print the details of their monthly pension using their personal computer or mobile devices as long as there is an internet connection. Such default password can be changed by the PNP pensioner at his own convenience by accessing the link through the internet.

2) The PNP pensioner shall be responsible for the settlement of his obligations to the FIs. He shall personally undertake necessary actions pertaining to request to condone penalties and surcharges for underpaid accounts.

c. INSTITUTIONS (FI, Provident Fund, Coop)

1) FIs and the PNP Provident Fund shall observe the following:

a) In order to access the PDLIS, the authorized users designated by the FIs shall enroll in the PDLIS for the issuance of their individual Username and registration of corresponding Password. Enrollment shall be done by FS. The registration shall be supported with the following:

i. Copy of the valid MOA between the PNP and the FI allowing the FI to deduct from the pension of the PNP pensioners.

ii. Letter of endorsement from the FIs indicating the names of their authorized users.

iii. Authenticated photocopy of their valid company identification card; and

iv. Changes in the authorized user/s shall be reported to FS Attn: Pension and Gratuity Section (PGS), Disbursement Division (DD), Finance Service (FS) with proper endorsement, for the updating of users and enrollment of new authorized users in the PDLIS. FS shall not be held liable for loan transactions made by unauthorized users.

d. FS

1) Authorized PDLIS users in the FS shall be covered with appropriate office orders issued by D, FS. Changes in PDLIS Users shall likewise be issued orders.

2) FS Personnel shall have separate sets of Password as loan verifiers and loan approvers.

a) PGS Verifier — to check if the APD and loan release voucher are attached:

i. Corresponds to the deduction applied for in the system;

ii. Has the same signature of the pensioner as proof of loan of the borrower; and aICcHA

iii. Date of the APD should be consistent with the day of the loan availment, date signed by the PNP pensioner and encoded in the PDLIS.

 The PGS verifier shall call the attention of the FI to delete the transaction if found not to correspond to the requirements of this circular.

b) PGS Approver — to approve the transactions by allowing approval and subsequent printing of all reports. No approval, no final reports can be printed.

c) PGS Processor — to generate required reports and prepare the disbursement vouchers for payment.

3) The FS personnel assigned to verify the attached APDs against the deductions are required to check everyday the validity of the transactions. FS shall be responsible in notifying concerned FIs of accounts with questionable data or discrepancies through their official email. The FI shall be required to delete the transaction if found that it could not be remedied within the transaction day.

4) FS personnel shall be the system administrators, and they shall be given specific tasks pertaining to configuration of changes in the system/program; to provide support to the network, hardware and/or system; to maintain security policies; to trouble shoot; to train and/or supervise the PGS personnel; and perform other tasks as deemed necessary.

5) The PGS, FS shall maintain the list of all authorized users and their email and contact numbers.

6) The PGS, FS shall ensure that the verified deductions of loan transactions shall be processed not later than 12:00 noon on the 27th of the month for the payment of loans through APDS and the report generation done on the same day.

7) FS shall be the OPR (Office of Primary Responsibility) on the following activities pertaining to the collection of Loan Amortization. Remittance to FLIs of collected Loan Amortization is not later than 10th day of the succeeding month and corresponding Official Receipts (ORs) shall be issued in favor of FIs.

9. Procedures

a. Registration of Users

1) FI shall submit the following to PGS, FS:

a) Names of authorized employees

b) Photocopies of the IDs of their authorized employees

c) Contact number and email address

2) PGS, FS shall encode the names in the system and generate the username and default password; and

3) PGS, FS shall release said usernames and default password to the FIs authorized users e-mail address.

b. Encoding of Transactions

1) The FI's authorized user shall log-in his/her Username and Password to access the PDLIS.

2) The system will consider if the transaction involves the following transactions:

a) Investment/deposit deductions;

b) New loans;

c) Loan renewals;

d) Transfer of Loan;

e) Balance of unpaid loans from active service;

f) Stoppage of loan deductions (full payment).

3) The FI authorized user shall encode the following information (as required) in the system:

a) Deduction Code

b) Applied Loan Amortization; and

c) Term

d) Transaction Ref No. EHaASD

e) OR No. with Date

f) Principal Amount Paid

4) The FI authorized user shall upload the following documents:

a) APD Form

b) Loan Voucher (for loan transactions only)

5) The system shall assess if the deduction can be made and if the required attachments have been attached. It will afterwards generate a transaction code for all deductions.

6) All original documents pertaining to the deduction such as the APD Form and loan release voucher shall be retained by the concerned FI for reference, and to be submitted to FS, if necessary, or as requested, for whatever legal purpose.

7) The FIs shall generate their respective report or list of approved loans for confirmation and validation after final approval of the PGS, FS.

8) The approved transactions through the PDLIS shall be implemented on the following month from the pensioner's monthly pension. Transactions after the cut-off date shall be implemented on the next succeeding month.

9) The FIs may generate the Collection List and other reports from their terminal/work station, for their reference.

10) It shall be the responsibility of the FI to delete the transaction that did not push through but was encoded in the system. Failure may subject the FI of penalties provided in this SOP.

11) All transactions by the FIs should be encoded or uploaded in the PDLIS by 3:00 PM in order to have a disposition by the PNP by 5pm of the same transaction day.

c. Checking of Daily Transactions

1) PGS, FS authorized verifier shall log-in his/her Username and Password to access the PDLIS.

2) PGS, FS authorized verifier shall check all deductions and the attachments made by the FI on a daily basis and call the attention of the FI for any questionable transaction through call and email.

3) Request and Monitor the FI for deletion of transaction that did not push through, within the day.

d. Approval of Daily and Monthly Transactions

1) PGS, FS authorized approver shall log-in his/her Username and Password to access the PLIS.

2) PGS, FS authorized approver will approve all daily transactions.

3) PGS, FS processor to print the daily and monthly approved transactions.

e. Remittance of Deductions

1) FS shall prepare the vouchers and the checks representing the collection of the FIs and release the same not later than what has been stipulated in the MOA.

10. SANCTION:

Personnel who will be found remiss of their duties and responsibilities shall be charged and held liable in accordance with existing laws, rules and regulations. Likewise, accredited FIs that violate the policies herein shall be subject to investigation, and shall be reported to the CAAD and/or other proper authorities for appropriate sanctions.

11. REPEALING CLAUSE:

Provisions of existing circulars and other issuances related to automatic pension deduction inconsistent with this SOP are hereby rescinded, repealed, and modified accordingly.

12. EFFECTIVITY:

This SOP shall take effect after 15 days from the filing of a copy hereof at the University of the Philippines Law Center in consonance with Section 4 of Chapter 2, Book VII of Executive Order No. 292, otherwise known as "The Revised Administrative Code of 1987", as amended.

(SGD.) RONALD M. DELA ROSAPolice Director GeneralChief, PNP

ANNEX A

HEADING

AUTHORIZATION FOR PENSION DEDUCTION

To whom it may concern:

I hereby authorize that the amount of P _________________ be deducted from my monthly pension for a period of _________ months. Furthermore, I hereby irrevocably assign/appoint the Director, Finance Service as my attorney-in-fact to ensure the implementation of such deduction until the full settlement or liquidation of my loan obligation with _____________________.

___________________________________

SUBSCRIBED AND SWORN to before me this ____________ day of ________________ 20__ at ______________________________ Philippines.

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Doc No. _____________

Page No. _____________

Book No. _____________

Series No. _____________

ANNEX B

Flowchart on Automatic Pension Deduction Scheme (APDS)

ANNEX C

Billing Process Using the Pension Deduction

n   Note from the Publisher: Copied verbatim from the official copy. Irregular numerical sequence.

n   Note from the Publisher: Copied verbatim from the official copy. Irregular numerical sequence.