As a Philippine employer, you are mandated by the government to comply with labor laws and regulations to ensure the welfare and rights of your workers.
Part of these laws includes providing mandatory benefits such as Pag-IBIG contributions. These contributions are crucial in providing Filipino employees with access to affordable housing loans and short-term loans while also serving as a savings program for their future needs.
In this guide, we will walk you through the Pag-IBIG monthly contribution requirements, including the contribution rates, payment procedures, and deadlines. We will also cover the benefits of Pag-IBIG membership for both employers and employees, as well as the penalties for non-compliance.
What is an HDMF contribution?
HDMF refers to the Home Development Mutual Fund, also commonly known as the Pag-IBIG Fund. It was established by the Philippine government on June 11, 1978, through Presidential Decree No. 1530.
Its primary objectives were to promote savings and enhance housing accessibility for Filipino workers.
The fund aimed to create a mandatory savings scheme through employee and employee contributions, which would also facilitate affordable home loans at lower interest rates compared to private banks.
The initiative drew inspiration from successful provident fund models in countries like Malaysia and Singapore, addressing the need for financial security and capital formation in the housing sector.
What is the Pag-IBIG Fund?
Pag-IBIG is an acronym that stands for Pagtutulungan sa Kinabukasan: Ikaw, Banko, Industriya at Gobyerno. This is a government-managed savings program and housing finance system. It helps members save a portion of their income while offering them financial assistance for housing and other needs.
What are the benefits of Pag-IBIG contributions?
Housing loan: Through this program, members can apply for affordable home loans. This is better than borrowing from the bank because the loan has low interest, and it takes a longer time to pay. For example, the maximum payment period for the loan is thirty years. This way employees can fulfill their dreams of owning a home.
Calamity loan: Loan offered to members who have been affected by a pandemic or natural calamities such as floods, fires, tropical cyclones, or volcanic eruptions. This is a form of financial assistance to help the victims rebuild their lives and get back to normal.
Short-term loan: Loan members can borrow for emergencies or personal needs like house repair, minor home improvement, home enhancement, tuition or educational expenses, or health and wellness.
Maturity savings: Maturity savings refer to the accumulated amount a member can withdraw after meeting specific conditions.
For the Pag-IBIG contribution, this is defined as either reaching 240 monthly contributions (20 years) and being at least 45 years old or meeting other stipulated maturity terms. The total savings, called the Total Accumulated Value (TAV), can be withdrawn when the member reaches 240 contributions (20 years) and is at least 45 years old.
Unlike regular bank savings with fixed interest, the growth of Pag-IBIG savings depends on how well the fund’s investments perform. It works like a mix of savings and investment, offering higher potential returns for members.
Optional MP2 savings: The Pag-IBIG contribution MP2 Savings Program is a voluntary savings option for members, former members, and pensioners, offering higher, tax-free dividends compared to regular savings. With a minimum savings of PHP 500 and no maximum limit, it earns dividends from at least 70% of the fund’s annual net income. Members can choose to receive dividends annually or after a five-year maturity. Once matured, a new account can be created, making it ideal for long-term savings.
How does the Pag-IBIG contribution schedule work?
1. Employees and employers
Employers and employees equally share the monthly Pag-IBIG contribution.
- Monthly contributions: Employers deduct 2% of an employee's monthly salary and add their 2% counterpart contribution.
- Due date: The contributions must be remitted on or before the 10th day of the following month. For example, contributions for January must be remitted by February 10.
2. Voluntary members
Freelancers, self-employed individuals, and Overseas Filipino Workers (OFWs) can also contribute to the Pag-IBIG Fund.
- Flexible contributions: Voluntary members can decide how much to contribute, with a minimum of PHP 100 monthly.
- Due date: Contributions are due on or before the 10th of the following month.
3. Household employers
Household employers, such as those domestic helpers, are also required to remit Pag-IBIG contributions.
- Employer’s responsibility: Pay both the employer and employee share of the contribution.
- Due date: Contributions follow the same schedule as regular employers (10th of the following month).
What are the Pag-IBIG contribution rates?
For employees and employers
For employees earning PHP 1,500 or below, the rate is 1%. For those earning above PHP 1,500, it is 2%.
For employers, it is fixed at 2% of the employee’s monthly salary.
For voluntary members
Voluntary contributors can choose their desired contribution amount, but it should not be less than PHP 100 per month.
For household employers
Similar to regular employers, the household employer must contribute 2% of the domestic worker's monthly salary.
How to remit Pag-IBIG contributions?
Remitting Pag-IBIG contributions involves submitting and paying the monthly contributions for members of the HDMF fund. Once you're done calculating and preparing the payments, here are ways contributions can be remitted.
Over-the-counter payment
Here, Pag-IBIG contribution 2024 is submitted at any Pag-IBIG Fund office or at any accredited bank.
Online payment
Contributions can be remitted online through the Pag-IBIG official website. Log into the website and click “E Services and Online Payment.” This can be completed through a debit or credit card. Some mobile payment apps allow you to pay Pag-IBIG contributions 2025. These include Shopee and GCash.
Auto-debit arrangement
An auto debit arrangement (ADA) is a payment method where a predetermined amount is automatically deducted from your bank account on a specified schedule to pay for recurring obligations, such as loans, bills, or contributions. In the context of the Pag-IBIG Fund, an ADA allows members or employers to conveniently pay their monthly contributions or loan payments without manually visiting a payment center.
Remitting contributions ensures your Pag-IBIG membership stays active, allowing you to access benefits like housing loans, savings, and financial assistance programs.
What are the penalties for late Pag-IBIG contributions?
This refers to the financial charges imposed on employers or members who fail to remit their contributions on time. These penalties serve as an incentive for timely payments and ensure the sustainability of the Pag-IBIG Fund.
Loss of loan eligibility
Failure to pay contributions on time may disqualify members from availing themselves of Pag-IBIG loans, such as housing or multipurpose loans.
Accumulation of penalties
According to the Pag-IBIG Fund Law (RA 9679), non-payment of Pag-IBIG contributions can lead to penalties equivalent to 1/10 of 1% per day of delay. In other words, the longer the delay in remitting the contributions, the higher the penalties will accumulate.
For example, if an employer fails to pay PHP10,000 in contributions:
Daily penalty = PHP 10,000 × 0.001 = PHP 10 per day.
After 30 days of delay: PHP 10 × 30 = PHP 300 penalty.
Paying contributions on time ensures compliance with the law and avoids unnecessary penalties that could burden businesses or individual members.
To avoid penalties, employers and voluntary members must ensure timely remittance of contributions.
As stated above, the deadline for monthly contributions is typically the 10th day of the following month after the salary is paid. Regularly reviewing and submitting contributions before the due date helps prevent penalties and ensures continued access to Pag-IBIG benefits.
Suspension of benefits
Late contributions can delay or suspend a member's ability to claim benefits, including dividends, savings, or access to other programs. Persistent non-compliance can also result in legal action, including criminal charges.
How to check your Pag-IBIG contribution record?
To check your Pag-IBIG contribution record means to verify and review the details of your membership contributions to the Pag-IBIG Fund. This record reflects the amounts you and (if applicable) your employer have paid into your Provident Savings account over time. It is essential to ensure your contributions are up-to-date and accurate.
Online via the Pag-IBIG website
The Pag-IBIG website allows you to access their service virtually anytime and anywhere using just your smartphone or computer with an internet connection. They have a live chat service operating 24/7, ready to answer your questions and address your concerns.
Simply log in or create an account through the Virtual Pag-IBIG platform to view your contribution history.
Via Pag-IBIG Mobile App
The Pag-IBIG mobile app makes it easy to access your Pag-IBIG membership details and contribution records anytime and anywhere. It offers a user-friendly platform to monitor your account and manage your membership. Download the Pag-IBIG mobile app from Google Play Store or Apple App Store.
Log in to your account and access your contribution records. The app has additional features that allow you to check loan balances and application status, view or update personal details, and pay contributions or loans through the app.
Visit a Pag-IBIG Office
There might be cases where you might want to skip using the Pag-IBIG website or mobile app and prefer to visit a Pag-IBIG office directly. This could be for personal assistance, technical issues, or if you don't have access to the app or internet services.
Go to the nearest Pag-IBIG branch. Present a valid ID and your Pag-IBIG MID (Membership ID) Number, then request a printout of your contribution record.
Regularly checking your contributions ensures you stay updated and avoid penalties or lapses in your benefits.
Simplify Pag-IBIG Contribution with Omni
Navigating the ever-evolving regulations when it comes to Pag-IBIG contributions can be challenging, and staying up to date with the latest mandates is crucial for HR teams to remain compliant. That’s why it’s important to have the right tools by your side.
Omni’s all-in-one HR software helps you stay up to date with the latest laws and regulations for the Philippines’ PhilHealth while streamlining the end-to-end employee management lifecycle.
Our comprehensive payroll solution is tailored to the Philippines’ specific requirements. With features like support for the Philippine peso, automated PhilHealth contribution calculations, and instant payroll reports, Omni can help HR teams simplify their payroll processing while ensuring compliance with local labor laws and regulations.
Book a demo with our team to learn more about how Omni can help simplify your payroll and compliance process today.
%20(1).avif)
.avif)
