The Home Development Mutual Fund (HDMF), popularly known as Pag-IBIG Fund, is a government financial institution established under Republic Act No. 9679 to provide affordable housing financing and mutual savings programs for Filipino employees. This guide explains how Pag-IBIG contributions are calculated under official Pag-IBIG Circular No. 460.
1. The Maximum Fund Salary (MFS) Adjustment
Under Pag-IBIG Circular No. 460, the Maximum Fund Salary (monthly compensation ceiling) was increased from ₱5,000.00 to ₱10,000.00. This adjustment doubled the maximum mandatory regular monthly savings, allowing members to accumulate higher dividend-earning retirement savings while doubling their borrowing capacity for Pag-IBIG housing loans.
2. Contribution Rate Tiers
Contribution rates are tiered based on the employee's monthly basic salary:
- ₱1,500.00 and below:
- Employee Share: 1.0%
- Employer Share: 2.0%
- Over ₱1,500.00:
- Employee Share: 2.0%
- Employer Share: 2.0%
3. Maximum Mandatory Contributions
Because the Maximum Fund Salary is capped at ₱10,000.00, mandatory contributions for all employees earning ₱10,000.00 or more per month are capped as follows:
- Maximum Employee Share: ₱10,000.00 × 2% = ₱200.00 / month
- Maximum Employer Share: ₱10,000.00 × 2% = ₱200.00 / month
- Total Mandatory Monthly Remittance: ₱400.00 / month
4. Voluntary Additional Savings (MP2)
While the mandatory regular savings ceiling is ₱200.00 per month, members may elect to contribute higher monthly amounts to their regular Pag-IBIG account, or open a voluntary Modified Pag-IBIG II (MP2) account. MP2 offers tax-free annual dividends (typically yielding 6% to 7.5% per annum) with a 5-year maturity period.
5. Worked Examples
Example A: Monthly Compensation of ₱1,200.00
- Falls in the ₱1,500.00 and below tier.
- Employee Share: ₱1,200.00 × 1% = ₱12.00
- Employer Share: ₱1,200.00 × 2% = ₱24.00
- Total Monthly Remittance: ₱36.00
Example B: Monthly Salary of ₱35,000.00
- Because ₱35,000.00 exceeds the ₱10,000.00 MFS ceiling, the contribution is capped at ₱10,000.00.
- Employee Share: ₱10,000.00 × 2% = ₱200.00
- Employer Share: ₱10,000.00 × 2% = ₱200.00
- Total Monthly Remittance: ₱400.00