(Philippine context — practitioner’s guide)

Overview

Many members of the Social Security System (SSS) find themselves holding both a Salary Loan and a Calamity Loan (issued under various Calamity Loan Assistance Programs, or “CLAP”). Questions often arise when renewing a salary loan: Will SSS (or my employer) deduct both loans at the same time? Can the new salary loan wipe out my calamity loan? This article lays out the rules, practical implications, and compliance steps for employees, employers, and self-employed/voluntary members.

Short answer: If you have both an active Salary Loan and an active Calamity Loan, their monthly amortizations are collected separately and run at the same time (“simultaneously”), until each loan is fully paid. A salary loan renewal generally nets out only the balance of the previous salary loan from the new proceeds; it does not extinguish an outstanding calamity loan.

Legal and policy backbone (high level)

Social Security Act (RA 11199) and its IRR. Empowers SSS to grant member loans, impose interest/penalties, offset unpaid obligations from benefits, and require employer deduction/remittance of loan amortizations for employed borrowers.
SSS loan program circulars. SSS administers program terms (loanable amount, interest, repayment terms, moratoria for calamity loans, restructuring, condonation episodes, etc.). While details can vary by circular or declared calamity, one constant is that each loan is a distinct obligation with its own amortization schedule.

Core concepts

1) Separate obligations; separate billings

Salary Loan and Calamity Loan are independent accounts. Each has its own interest rate, schedule, and billing.
For employed members, SSS issues Loan Collection Lists (LCLs) to employers per loan, and the employer must payroll-deduct each amortization and remit them to SSS.
For self-employed/voluntary members, you pay each loan directly, per its due schedule.

Practical effect: If you hold both loans, both amortizations will be deducted in the same month (subject to minimum take-home pay rules in your workplace and payroll timing).

2) Renewal nets out only the old salary loan

A Salary Loan Renewal typically becomes available when the member has paid a requisite portion of the existing salary loan (commonly at least 50% of principal, with good standing and updated contributions).
Upon renewal, SSS first settles the outstanding balance of the existing salary loan from the new loan proceeds (a “net-off”).
The calamity loan is not part of this net-off. It continues on its original terms, with its monthly amortization still due.

3) “Simultaneous” means concurrent amortization, not consolidation

Since each loan stands on its own, simultaneous deduction means two separate payroll deductions (or two separate payments if you pay directly), one for the salary loan and one for the calamity loan.
There is no automatic consolidation of calamity and salary loans under a salary loan renewal.

Interest, fees, penalties (typical mechanics)

Exact figures can vary by circular and period. The points below reflect standard mechanics commonly used by SSS programs.

Interest: Commonly computed per annum on a diminishing principal (apportioned monthly).
Service fee: A small percentage of the loan (often 1%) may be deducted upfront from the proceeds.
Penalty for late payment: Monthly penalty applies on overdue amounts (unpaid principal/interest), computed per month of delay until brought current.
Application of payments: SSS typically applies payments to penalties first, then interest, then principal for each loan separately.

Sample computations (illustrative only)

Assume the following, for illustration:

Interest: 10% per annum on a diminishing balance.
Term: 24 months (monthly amortization).
Service fee: 1% of principal, deducted upfront.

A. Existing loans running simultaneously

Salary Loan: ₱30,000 principal, 24 months
- Monthly interest rate ≈ 0.10 / 12 = 0.008333
- Monthly amortization ≈ ₱1,384.35
- Service fee (1%): ₱300 → net proceeds (if new) would be ₱29,700.
Calamity Loan: ₱20,000 principal, 24 months
- Monthly amortization ≈ ₱922.90
- Service fee (1%): ₱200 → net proceeds (if new) would be ₱19,800.

Total simultaneous monthly deduction while both are active: ₱1,384.35 + ₱922.90 = ₱2,307.25.

Notes: Some CLAPs have moratorium periods (e.g., first few months with no payment), after which amortization begins. Once both are “live,” they’re commonly collected together each month.

B. Renewal of the salary loan while a calamity loan is ongoing

Suppose you renew your salary loan when your remaining balance is ₱12,000.
You qualify for and take a new ₱35,000 salary loan.
SSS will net off ₱12,000 to settle the old salary loan.
You receive ₱35,000 – ₱12,000 – service fee (₱350) = ₱22,650 (approx.) as net proceeds.
The calamity loan continues unchanged; its monthly amortization still runs.
Your new salary loan amortization begins per the new schedule, in addition to the ongoing calamity loan amortization.

Payroll and compliance

For employers

Mandatory payroll deduction and timely remittance of each loan amortization are required once you receive SSS billing/LCLs.
Failure to deduct/remit can expose the employer to liability for the overdue amortizations, penalties, and potential administrative/sanction risks.
Maintain clear records: keep the LCLs, proof of deductions, remittance receipts, and posting confirmations.

For employees (employed members)

Expect two separate deductions if you have both loans active.
Flag take-home pay constraints early with HR/payroll to avoid short or missed remittances, which can create penalties and default on one or both loans.
Check postings via your SSS Online account (or official channels) to ensure both loans are credited monthly.

For self-employed/voluntary members

Track two due dates/schedules. Missing either triggers penalties for that specific loan.
Use official SSS payment partners and retain receipts.

Effects of default, offsets, and restructuring

Default and penalties: If an amortization is missed, each loan will accumulate penalties separately.
Offsets from benefits: Unpaid SSS loans may be offset against final benefits (e.g., retirement, total disability, death), per SSS rules.
Restructuring/condonation episodes: From time to time, SSS opens Loan Restructuring Programs (LRP) or condonation windows. These programs generally treat each loan separately; you may restructure one or both if eligible.

Frequently asked questions

1) Will my calamity loan be cleared when I renew my salary loan? No. Renewal of a salary loan typically clears only the old salary loan balance via net-off. Your calamity loan continues.

2) My employer deducted only one loan this month. Is that okay? If both loans are active and billed, both must be deducted and remitted. Missing one creates arrears and penalties for that specific loan.

3) Can SSS prioritize which loan my payment goes to? Payments are allocated per loan, usually according to SSS’s application hierarchy (penalty → interest → principal) within that loan. You generally cannot instruct SSS to apply a single payment across loans unless a program/circular allows it.

4) I cannot afford both deductions. What can I do?

Check if your calamity loan is still under moratorium (if newly released).
Explore loan restructuring/condonation if available.
Consider repaying one loan in advance (to stop that amortization) if feasible.
Coordinate with HR/payroll about timing and take-home pay constraints; but note that legal obligations to remit still apply.

5) After my salary loan renewal, the net cash I received was lower than expected. Why? Because SSS first netted the remaining balance of your old salary loan from your new loan proceeds, then deducted the service fee (and any other applicable charges). The calamity loan was not touched.

6) Can I consolidate my salary and calamity loans into one? As a rule, no; they are distinct programs. Consolidation is not a standard feature unless SSS issues a specific program permitting it.

Practical checklist

Before renewing a salary loan
- Verify: (a) percentage of principal paid and (b) good standing (no arrears).
- Confirm: calamity loan status (moratorium vs. amortizing).
- Estimate: new monthly amortization and your combined monthly deductions.
While holding both loans
- Monitor two separate amortizations.
- Keep an eye on payroll postings or SSS online records monthly.
- Avoid missed remittances to prevent compounding penalties.
If cash-flow tightness arises
- Ask about restructuring/condonation windows.
- Consider partial prepayment on one loan to eliminate its monthly amortization sooner.
- Ensure employer remittances are up to date if you’re employed.

Bottom line

Yes, deductions are simultaneous: If you have both a Salary Loan and a Calamity Loan, each loan’s amortization is deducted and remitted separately but concurrently.
Renewal ≠ consolidation: A salary loan renewal nets out only the prior salary loan balance from the new proceeds. The calamity loan remains and continues on its schedule.
Manage proactively: Track both loans, anticipate total monthly deductions, and address any payment difficulties early to avoid penalties and protect your benefits.