What is the Pag-IBIG Fund?

Every Filipino worker is automatically docked a minimum of P100 on a regular monthly basis for their Pag-IBIG contribution – also knows as the Home Development Mutual Fund (HDMF) contribution – but what exactly is the Pag-IBIG Fund?

A much-needed abbreviation for Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industriya at Gobyerno, the Pag-IBIG Fund was established to facilitate a national savings program and affordable shelter financing for its members.

Pursuant to Republic Act No. 9679, or the Home Development Fund Law of 2009 (signed by then-President Gloria Macapagal-Arroyo), the Fund “is a government financial institution involved in mobilizing provident funds primarily for shelter finance. It is a nationwide tax-exempt mutual provident savings system for private and government employees and other earning groups, supported by matching mandatory contributions of their respective employers in the spirit of social justice and the pursuit of national development, with housing as the primary investment.”

Furthermore, the law stipulates that Pag-IBIG membership is mandatory for all employees covered by the Social Security System (SSS) and the Government Service Insurance System (GSIS), as well as members of the Armed Forces of the Philippines, the Bureau of Jail Management and Penology, the Bureau of Fire Protection, the Philippine National Police, as well as any Overseas Filipino workers.

Today, the primary focus of the Pag-IBIG Fund is to help Filipinos acquire a home, made possible by its flexible housing loans (the maximum loanable amount at P6 million); Pag-IBIG also offers multipurpose loans (the loanable amount depending on the borrower’s number of contributions).

Aside from offering both short-term and long-term loans, the Pag-IBIG Fund also helps Filipinos save money. For example, members may withdraw their savings (the amount they have paid to their Pag-IBIG contributions over the years) after 20 years of membership, or after making at least 240 non-consecutive monthly contributions. These savings can also be withdrawn once the member retires, leaves the country permanently, or incurs permanent or total disability.

However, being a member does not necessarily guarantee that one can automatically avail of said benefits; there are a required number of contributions before members can apply for loans… likewise, those who wish to avail of housing loans must possess the legal capacity to own property. Pag-IBIG requires the borrower to shoulder at least 20% of the total value of the property, or the usual downpayment required by developers.

With the many benefits employees can derive from their Pag-IBIG membership, they should ensure that their employers are appropriately paying their contributions. For inquiries on the breakdown of contributions, members can email publicaffairs@pagibigfund.gov.ph, call the hotline on (02) 724-4244, or visit pagibigfund.gov.ph.

If you want more details on how to make the correct deductions for your payroll, just contact us at sales@philpay.ph

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