Home Finance Long overdue PAG-IBIG contribution hike takes effect January

Long overdue PAG-IBIG contribution hike takes effect January

Long overdue PAG-IBIG contribution

Manila, Philippines – The Pag-IBIG Fund is expected to push through with the “long overdue” contribution hike set to take effect in January 2024.

“It will continue, we already informed the President. It’s good to go,” Pag-IBIG CEO Marilene Acosta told reporters in an interview.

“We just want something in writing and we already sent the memo last week of November,” she added.

She believes there would be no objection to the contribution increase given that it has not been done for nearly four decades now. The last time that the contribution rate was set was in 1986. “It is long overdue,” Acosta said.

Given the rate increase, the funds generated are expected to translate to about P34 billion in Pag-IBIG resources annually. Having said this, an employee will be adding P100 and will be matched by the employer for the same amount.

“Those savings if translated into housing units (that we can finance) will be a lot. The additional P100 will go to their savings and we also give dividends,” Acosta said.

It could be recalled that last March, Pag-IBIG postponed the contribution hike that was supposed to take effect this year as workers and business owners are just recovering from the pandemic.

Based on existing PAG-IBIG Fund’s contribution policy, the so-called monthly fund salary, which is the basis of the 2% contribution rate is pegged at a maximum of P5,000 per month.

This means that the average premium of PAG-IBIG members is currently capped at P100 per month, with the employerr also paying P100 for the member savings fund.

PAG-IBIG was supposed to increase the MFS in 2021, 2022 and 2023, making the maximum MFS at P10,000. However the increase was deferred to 2024 given the lingering effects of the COVID-19 pandemic.

With the premium hike expected to take effect next year, P200 will be the maximum contribution for the member an another P200 for the employer.

Acosta added that the additional contribution will result in additional collection of around 34 billion yearly and will translate into more housing units.

PAGIBIG presently has 15.58 million active members. (Marlon Luistro)