SEC: Retirement Plan Loan Programs Are Not Covered by the Lending Company Regulation Act

In SEC OGC Opinion No. 25-14, the Securities and Exchange Commission clarified that a private retirement plan company may grant interest-bearing loans to its eligible employee-members for housing, education, and humanitarian purposes without securing a Certificate of Authority under the Lending Company Regulation Act of 2007 (LCRA). The Commission held that such lending, when confined to internal members and governed by registered plan rules, does not constitute the “regular business” of lending covered by the LCRA.

The Commission also distinguished retirement plan lending from commercial lending. While lending companies engage in the business of extending credit to the public for profit, retirement plan companies operate exclusively for employee welfare and provide retirement, death, and disability benefits. Any loan activity is incidental, authorized under the company’s Articles of Incorporation and plan rules, and limited to members.

The Opinion further emphasized that retirement plan funds are held in trust for employees, and that loans effectively allow members to borrow against their accrued benefits, rather than from corporate capital or investor funds. Because retirement plan companies are already regulated under Republic Act No. 4917 and applicable BIR regulations, they fall within the LCRA’s exclusion for entities governed by other laws.Finally, the SEC recognized that such loan programs fall within a corporation’s implied powers to carry out its primary purpose. Unlike entities offering credit to the public, retirement plan companies do not pose the risks addressed by the LCRA. Nevertheless, the SEC stressed that loan programs must remain incidental to employee welfare and comply strictly with BIR approved and registered plan rules to maintain their exempt status.