PAG-IBIG has recently increased the Maximum Fund Salary (MFS) in the Philippines through their Circular No. 460 released on January 15, 2024, which is then stated to take effect on February 2024.
The circular contains guidelines showcasing the updated contribution rates of PAG-IBIG members and the effects of the increase in MFS on the salaries of employees in the Philippines.
Guidelines on the increased MFS
The circular states that the MFS used in both employee and employee savings has been increased from Five Thousand Pesos (PHP 5,000) to Ten Thousand Pesos (PHP 10,000).
This increase was made following the financial calculations and rates of benefits provided in Section 7 of Republic Act No. 9679.
The circular then defines "Fund Salary" as the basic salary and other allowances, where basic salary includes, but is not limited to, fees, salaries, wages, and similar items received in a month. It shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, or piece or commission basis, or other method of calculating the same, which is payable by an employer to an employee or by one person to another under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered.
It then states that employers are required to remit two percent (2%) of the monthly "Fund Salary" of each contributing member as their counterpart contribution. Note that this employer's contribution cannot be deducted from the employee's wages or remuneration in any way.
The circular also illustrates the updated contribution rate of all PAG-IBIG member, this applies to both voluntary and mandatory members:
Monthly Fund Salary Under Mandatory Coverage
The next portion of the order explains that the monthly fund salary used for calculating contributions of all members under the mandatory coverage will be governed by the new rate, with potential exceptions as outlined in relevant regulations. These new specifications state that:
- All employees who are or ought to be covered by the Social Security System (SSS), provided that actual membership in the SSS shall not be a condition precedent to the mandatory coverage in the Fund;
- Private employees, whether permanent, temporary, or provisional who is not over sixty (60) years old;
- Filipino seafarers upon the signing of the standard contract of employment between the seafarer and the manning agency, which together with the foreign ship owner, acts as the employer;
- Self-employed persons subject to mandatory coverage, including those who registered for Fund coverage under HDMF Circular No. 96, shall be treated as both the employee and employer and shall therefore be required to pay both the employee share and the employer counterpart in accordance with the rates specified above.
- All employees covered by the Government Service Insurance System (GSIS), regardless of their status of appointment, including members of the Judiciary and Constitutional Commissions;
- Uniformed members of the Armed Forces of the Philippines, the Bureau of Fire Protection, the Bureau of Jail Management and Penology, and the Philippine National Police;
- Filipinos employed by foreign-based employers, whether they are deployed here or abroad or a combination thereof;
- Household workers or "Kasambahays" who fit the following definitions:
- General Household Helper;
- Yaya (Nanny);
- Laundry Person;
- Any person who regularly performs domestic work in one household on an occupational basis (live-out arrangement).
Following the guide, employers are responsible for contributing the specified Mandatory Monthly Savings (MS) based on the Fund Salary of their Kasambahay employees, as long as it falls below Five Thousand Pesos.
Their rate is as follows:
Note that If a Kasambahays' gross monthly Fund Salary is at least Five Thousand Pesos (P5,000), the Kasambahays and their Employers shall pay their corresponding proportionate share in the monthly Mandatory Savings.
The share’s rates are as follows:
6. Other Earning Groups including farmers, fisherfolks, market vendors, transport sector workers, other similar self-employed individuals, service providers, family drivers, and other persons who perform work occasionally or sporadically and not on an occupational or regular basis.
Monthly Fund Salary Under Voluntary Coverage
The circular confirms that the monthly fund salary used for calculating contributions of all members under the mandatory coverage will be governed by the new rate unless otherwise specified.
It then explains that Individuals between 18 to 65 years old are eligible for voluntary Pag-IBIG membership. But these potential PAG-IBIG members must still comply with the set rules and regulations for Pag-IBIG members including the amount of contribution and schedule of payment.
But please note that the availment of loans and other programs/benefits offered by the Fund by voluntary members shall be subject to specific eligibility requirements as stipulated by the relevant regulations.
The option for voluntary coverage applies to the following individuals:
Non-working spouses who devote their full time in managing the household and family affairs, unless they also engage in another vocation or employment which is subject to mandatory coverage, provided the employed spouse is a registered Pag-IBIG member and consents to the Fund membership of the non-working spouse.
Their contribution rate is as follows:
The non-working spouses shall not be required to remit the employer counterpart.
- Filipino employees of foreign government or international organization, or their wholly owned instrumentality based in the Philippines, in the absence of an administrative agreement with the Fund;
- Employees of an employer who is granted a waiver or suspension of coverage by the Fund under RA 9679;
- Leaders and members of religious groups;
- Members separated from employment, local or abroad, or ceased to be self-employed but would like to continue paying their personal contribution. Such members may be pensioners, investors, or any other individual with passive income or allowances; and
- Public officials or employees who are not covered by the GSIS such as barangay Officials, including Barangay Chairmen, Barangay Council Members, Chairmen of the Sangguniang Kabataan, and Barangay Secretaries and Treasurers.
Members reserve the right to contribute beyond the minimum stipulated herein, whereas employers' contributions are fixed following the guidelines stated in the MFS section. Nevertheless, employers have the option to match their employees' increased contributions voluntarily.
If the individual has multiple employers, they need to contribute a percentage of their Fund Salary (as per each employer) to the Fund. Each employer is then responsible for matching the employees’ contribution according to the rates of the MFS.
Other Circular Guidelines
The circular states that it has repealed, amended, or modified the following rules/guidelines to conform with its changes:
- Item 0 of Circular No. 274 on membership contributions
- Revised Guidelines on Pag-IBIG Fund Membership
- Other inconsistent previous issuances
The designated officer will try to resolve any questions or challenges regarding these Guidelines. If disagreements persist, then escalation to the next level of approval is necessary.