Supplemental Guidelines of Memorandum Circular No. 2014-042 Pertaining to the "Revised Guidelines in the Implementation of Automatic Salary and Pension Deduction" (Amended)

May 8, 2015

PNP MEMORANDUM CIRCULAR NO. 010-15

SUPPLEMENTAL GUIDELINES OF MEMORANDUM CIRCULAR NO. 2014-042 PERTAINING TO THE "REVISED GUIDELINES IN THE IMPLEMENTATION OF AUTOMATIC SALARY AND PENSION DEDUCTION" (AMENDED)

I. REFERENCES:

a. Republic Act No. 8367 entitled: "An Act Providing for the Regulation of the Organization and Operation of Non-Stock Savings and Loan Associations";

b. Republic Act No. 6938 entitled: "An Act to Ordain a Cooperative Code of the Philippines";

c. Memorandum Circular 2012-018 dated December 14, 2012 entitled: "Automatic Pension Deduction";

d. Memorandum dated March 25, 2013 with subject: "Scope and Jurisdiction of ASPDPC and PDPAC Regarding Automatic Deduction Either from Salary or Pension";

e. Department of Justice Opinion No. 10 s. 2014 dated February 10, 2014;

f. Memorandum Circular 2014-042 dated September 19, 2014 entitled: "Revised Guidelines in the Implementation of Automatic Salary and Pension Deduction"; DTCSHA

g. Memoranda from the AD, LS dated February 6 and January 20, 2015 pertaining to the Legal Opinion on the Service Fee (SF) Generated from Automatic Pension Deduction; and

h. Flow chart of CAAD's Automatic Pension Deduction Scheme.

II. SITUATION:

For the loans contracted by active PNP personnel, the Committee on Accreditation for Automatic Deduction (CAAD) formerly named Accreditation on Salary and Pension Deduction Processing Committee (ASPDPC) was created purposely to implement the Automatic Salary and Pension Deduction Scheme (ASPDS).

The Memorandum Circular on the "Revised Guidelines in the Implementation of Automatic Salary and Pension Deduction (Amended)" does not cover the provisions on guidelines in the implementation of Automatic Pension Deduction Scheme (APDS).

III. PURPOSES:

a) To provide guidelines in the implementation of Automatic Pension Deductions (APDS) of loans amortization contracted by PNP members-pensioner;

b) To provide guidelines on the functions and duties of concerned Offices/Units and all their activities to facilitate compliance with MC No. 2014-042 pertaining to the automatic deductions of loan obligations of PNP pensioners, whether it was contracted while in the active service or after their retirement, from accredited Financial Lending Institutions (FLIs) such as Non-Stock Savings and Loan Association (NSSLAs) and cooperatives, remittance to the accredited FLIs, and collection of service fees for services rendered by the PNP to the FLIs.

IV. DEFINITION OF TERMS:

a) Authority to Deduct (ATD) — refers to a document executed by an active/retired PNP personnel authorizing the PNP to make deductions from his retirement benefits in favor of any accredited Financial Institution.

b) Cooperatives — refer to PNP accredited cooperatives authorized under Republic Act No. 6938, organized and managed by government employees providing savings and loan services to PNP members;

c) Financial Lending Institutions (FLIs) — refer to the PNP accredited Non-Stock Savings and Loan Association Inc. (NSSLAIs) and Cooperatives providing savings and loan services to PNP members as provided under RA No. 8367 and RA No. 6938, respectively;

d) FS — refers to the PNP Finance Service;

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

f) Loan Release Voucher — refers to a document processed by FLIs authorized representative confirming the details of loan amount, interest, surcharges and date of loan granted duly signed and acknowledged by the pensioner/borrower;

g) Outstanding Loans — refer to the remaining balance of the loan upon the effectivity of the retirement of the retiring PNP personnel;

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

i) PNP Pensioner — refers to a person who may either be a retiree, transferee, or survivor. An outright pensioner refers to a PNP Personnel who opts to avail of the monthly pension upon retirement instead of a lumpsum;

j) PRBS — refers to the PNP Retirement and Benefits Administration Service;

k) Remittance Voucher — refers to a document prepared by PRBS as basis of FS for processing and subsequent issuance of check in favor of any accredited FLIs for payment of loan acquired by PNP personnel while still in active service;

l) Retiree — refers to a regular PNP Uniformed personnel who retired from the police service;

m) Survivors — refer to beneficiaries of PNP member who died while still in the active police service; CScTED

n) 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 automatic pension deduction;

o) Transferee — refers to a beneficiary of a PNP retiree who died after retirement;

p) Total Permanent Physical Disability — refers to the disability as a result of injuries suffered or sickness contracted in the performance of duty as duly certified by the National Police Commission, upon finding and certification by the appropriate medical officer, that the extent of the disability or sickness renders such member unfit or unable to further perform the duties of his/her position, entitling him/her to one year salary and to lifetime pension equivalent to eighty percent (80%) of his/her last salary, in addition to other benefits as provided under existing laws;

q) Update Form — refers to the form that contains personal data updates on the status of a retiree/pensioner.

V. PROCEDURES:

1. Registration of Pension-Borrowers and Establishment of Pension Deduction Master File

a) CAAD shall meet initially with the concerned Financial Lending Institutions (FLIs) to prepare a supplemental MOA for the automatic pension deduction, remittance of collection and charging of fees and subsequently determine those PNP retiring personnel and pensioners who have existing loan with them and the corresponding balance of their loan amortization.

b) CAAD shall furnish FS and PRBS with the list of accredited Financial Lending Institutions (FLIs) and approved number of deduction codes.

c) PRBS shall furnish FS and FLIs through a monthly report, copy furnished CAAD, on who among the retiring personnel opted to avail of the outright pension and also those who are about to receive pension after their 36 months lump sum stating the amount of pension and its effectivity for the necessary change report.

d) FLIs shall initially submit to FS the list of retiring/retired PNP personnel with loan obligation to be deducted from their monthly pension and the documentary requirements.

e) FS shall establish the pension deduction master file and print pension slip, whenever possible.

2. Deduction Scheme

a) FS (Pensions Gratuity Section) shall receive the consolidated billing reports from concerned FLIs for processing/examination of new loans with the following documents as proof of the loan transaction:

1) Latest Original Pension Update Form processed by PRBS/PRBU;

2) Current Statement Information (STI3) with three specimen signatures;

3) Duly Notarized Authority to Deduct (see attached format for uniformity);

4) Picture of pensioner borrower while signing, and showing a copy of the Authority To Deduct (ATD) with date when it was taken;

5) Loan Release Voucher; and

6) Latest original/certified pension slip, whenever available.

b) The following cut-off dates shall be observed in the submission of billing reports based on the monthly pension processing schedule:

1) The cut-off date for FLIs to submit their consolidated billing report and the required documents in soft and hard copies to FS is every 1st day of the month; e.g., for November pension, FLIs shall submit their billing report to FS on October 1. (See attached format for uniformity)

2) Billing reports received by FS after the cut-off date shall be implemented or processed on the succeeding pension pay period.

3) The cut-off date for the submission to FS of the updated Masterfile by PRBS is on the 1st working day of the month.

4) FS shall validate the Billing Reports starting on the 5th day of the month.

5) FS shall prepare the Funding Warrant on the 7th day of the month.

c) FS shall furnish FLIs the Collection List as their basis in the preparation of their billing report for the next month.

d) FS shall determine priority of payment of loan obligations based on the following sequence:

1. For Payment of Obligation contracted while in the active service:

a) Government Institutions such as PNP Provident Fund

b) Non-Stock Savings and Loan Associations

c) Cooperatives cDCEIA

2. For Payment of Obligation contracted after retirement:

a) Date of loan granted;

b) Date of notarized authority to deduct; and

c) Date of receipt of billing.

 In case the FS receives an agreement for support entered into by a retiree with his legal beneficiaries authorizing deduction from his pension in their favor, the same shall be forwarded to PRBS for appropriate action; provided that, pursuant to R.A. No. 9262 or Administrative Matter No. 02-11-12, in relation to the Family Code of the Philippines, court decisions or order regarding support, directing the PNP to allocate a portion of the retiree's pension in favor of his legal beneficiaries, shall be processed by PRBS.

e) In case where an active PNP personnel who has outstanding loan obligation, retired either compulsorily, optionally or through TPPD and that the 50% of his retirement benefits is not enough to pay his loan obligation, PRBS shall inform concerned FLIs the amount of the unpaid loan balance the amount of which to be subsequently deducted from their monthly pension. Consequently, concerned FLIs shall submit the following to FS as basis to support their billing report:

1) Original copy of ATD signed by the borrower allowing deductions of the outstanding loan balance from his subsequent benefits starting on the first monthly pension;

2) Remittance Voucher of the retiree, in case the retiree opted to avail of outright pension; and

3) Loan computation sheet.

 The monthly amortization of the remaining loan balance shall not exceed 50% of his monthly pension in consonance to Memorandum Circular 2014-029.

f) In case where the pensioner opted to restructure his loan, such loan shall be considered as new loan and concerned FLIs shall submit to FS the corrected billing report with the necessary loan documents as basis for the change report.

g) FS shall prepare the letter of refund based on the submitted change report and transmit the same to the FLIs.

3. Remittance of Deducted Loan Amortization and Collection of System Administration Fee

FS shall be the OPR (Office of Primary Responsibility) on the following activities pertaining to the collection of Loan Amortization and System Administration Fee (SAF):

1) Collect corresponding Loan Amortization and System Administration Fee (SAF) based on the breakdown of deduction generated by FS;

2) Issue corresponding Official Receipts (ORs) in favor of Financial Lending Institutions (FLIs); and

3) Prepare vouchers payable to a separate PNP account which may be utilized to cover expenditures representing costs of services appurtenant to the implementation of automatic pension deduction. Provided that, a report on said System Administration Fee (SAF) and the expenses incurred thereon shall be complied with.

The said SAF shall not be charged or passed on by the FLIs to the PNP pensioners as stipulated in the Supplemental Memorandum of Agreement (MOA) to be entered into by the PNP and accredited NSSLAs and cooperatives.

VI. REPEALING CLAUSE:

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

VII. EFFECTIVITY:

This Circular 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.) LEONARDO ARIAS ESPINAPolice Deputy Director General