Starting February 2024, members of the Home Development Mutual Fund (HDMF), or Pag-IBIG Fund, will see a 100% increase in their monthly contributions.
Currently, contributions are based on a monthly fund salary (MFS) capped at ₱5,000, with a 2% contribution rate. This means both members and employers each contribute ₱100 per month. Starting in February, the MFS will rise to ₱10,000, making the contribution ₱200 for both employees and employers.
Stay informed and plan ahead! Here’s everything you need to know about the changes to Pag-IBIG contributions in 2024.
What is an HDMF (Pag-IBIG) Contribution?
The Pag-IBIG Fund was established on June 11, 1978, under Presidential Decree 1530. Its primary mission is to help Filipino workers save money and make homeownership more accessible through affordable loans. Pag-IBIG contributions are deducted from employees’ paychecks, providing a steady way to build savings and earn dividends over time. In addition, the Fund offers home loans at lower interest rates compared to private banks, helping workers purchase or improve their homes.
What Will Your New Pag-IBIG Contribution Be?
The Pag-IBIG contribution rates are set to double in 2024, from ₱100 to ₱200 for employees earning above ₱1,500 per month.
For monthly salaries up to ₱1,500, the contribution rate remains at 1%, amounting to ₱15 per month.
For salaries above ₱1,500, the contribution increases to 2%, which means both the employee and employer will each contribute ₱200 per month.
1%
1,500php Below
1%
2%
2%
Over 1,500php
2%
2%
Why the Increase?
The Pag-IBIG Fund’s decision to raise contribution rates aims to increase members’ retirement savings and improve access to emergency loans. With the new contribution structure, members can expect to see their savings double, along with increased annual dividends. For example, a member who would have received around ₱87,000 after 20 years of contributions under the old rates can now expect around ₱174,000.
Increased savings will also make members eligible for higher multi-purpose and calamity loans, offering them greater financial flexibility.
How to Calculate Your Pag-IBIG Contribution
Calculating your contribution is simple once you know your monthly salary and contribution rate:
For salaries of ₱1,500 or less, your contribution is 1% of your monthly salary.
For salaries over ₱1,500, the contribution rate is 2%.
For example, if you earn ₱10,000 per month:
₱10,000 x 0.02 = ₱200 (your personal contribution)
The employer will match this, so the total contribution is ₱400.
Note: Starting in 2024, the minimum contribution for all employed members is ₱200, regardless of salary.
Contribution Deadlines
Pag-IBIG contribution payments are due according to the first letter of the employer’s company name:
A – D: 10th to 14th day of the month
E – L: 15th to 19th day of the month
M – Q: 20th to 24th day of the month
R – Z, Numerals: 25th to the end of the month
A – D
10th – 14th Day of the Month
E – L
15th – 19th Day of the Month
M – Q
20th – 24th Day of the Month
R – Z, Numeral
25th – at the end of the Month
Where to Pay Your Pag-IBIG Contributions
For employees, contributions are automatically deducted from your paycheck and submitted by your employer. If you’re self-employed or working abroad, you can pay your contributions via:
- Virtual Pag-IBIG Portal
- Any Pag-IBIG Fund branch
- Digital non-bank and online banking platforms
- Debit/credit card payments (Visa, Mastercard, or JCB)
- Maya (formerly PayMaya)
For micro and small businesses, Pag-IBIG has launched the Electronic Submission of Remittance Schedule (eSRS) system, simplifying the process of paying employee contributions.
Impact on Employers in 2024
The 100% increase in Pag IBIG contributions will affect employers in several ways:
- Increased Financial Burden: Employers will have to contribute double the amount towards each employee’s Pag-IBIG account, increasing the overall cost of employment.
- Payroll Adjustments: Employers will need to update payroll systems to reflect the new contribution rates, which may require additional software updates and testing.
- Employee Expectations: Some employees may view the higher contributions as a reduction in their take-home pay. Employers should communicate the long-term benefits of the increased contributions, including enhanced financial security.
- Compliance Risks: Employers must ensure full compliance with the new contribution rates to avoid penalties. Late payments incur a penalty of 1/10 of 1% of the amount due per day.
Penalties for Late Contributions
If an employer fails to remit contributions on time, they may face penalties. To calculate the penalty for late payments, use the following formula:
Total Penalty = Amount Due x 0.001 x Number of Days Delayed
For example, if an employer with 50 employees has a 30-day delay in making payments, they would calculate the penalty based on the amount due.
Final Thoughts
The Pag-IBIG contribution increase in 2024 is a significant change that benefits both employees and employers in the long run, enhancing savings, retirement funds, and loan access. Stay proactive and ensure your payroll systems are updated, while also educating employees on the advantages of these adjustments.
