QuestionsQuestions (Republic Act No. 7742)
RA 7742 amends and reinstates Section 4 of PD 1752 (which had been repealed by EO 90), further amends Sections 5 and 6 of PD 1752, and amends Section 10(c) of PD 1752. It also repeals inconsistent portions of EO 90 (Sections 10(b), (c), and (d)). Overall, it modifies the Home Development Mutual Fund (Pag-IBIG Fund) coverage, contributions, membership terms, and investment requirements.
Coverage is mandatory upon all employees covered by the Social Security System (SSS) and the Government Service Insurance System (GSIS), and their respective employers, subject to the voluntary coverage exception for employees earning below the threshold stated in the law.
Employee coverage is voluntary for employees whose Monthly Compensation is less than Four thousand pesos (P4,000).
Upon membership with the Fund, their employers shall contribute an amount in accordance with Section 5 of RA 7742 (i.e., two percent (2%) of the monthly compensation of all covered employees, subject to the law’s definitions and caps).
Coverage may be extended to other working groups, with or without employer contributions, as may be determined by the Board of Trustees.
Employees earning not more than One thousand five hundred pesos (P1,500) per month contribute 1%; employees earning more than P1,500 per month contribute 2%.
Employers contribute two percent (2%) of the monthly compensation of all covered employees.
Monthly Compensation means the basic monthly salary plus Cost of Living Allowance (COLA).
Yes. The maximum Monthly Compensation to be used in computing employee and employer contributions shall not be more than Five thousand pesos (P5,000).
No. The employer shall not be entitled to deduct from the wages or remuneration of, or otherwise to recover from the employee the employer’s contribution.
Membership in the Fund shall be for a period of twenty (20) years, unless earlier terminated for reasons enumerated in the law.
Earlier termination may occur due to retirement, disability, insanity, death, departure from the country, or other causes as may be provided for by the Board of Trustees.
Those who become members after the effectivity of the Act may withdraw the total accumulated value of their contributions after the tenth or the fifteenth year of continuous membership.
They must have no outstanding housing loans with the Fund.
It may be exercised only once and shall not prejudice the member’s continuing membership in the Fund.
No. Resignation, lay-off, or suspension from employment may not necessarily constitute a ground for membership termination. However, suspension of contributions is an exception mentioned in the law.
The Board of Trustees must invest not less than seventy percent (70%) of its investible fund to housing, in accordance with the Act.
The Board of Trustees must promulgate the necessary rules and regulations within sixty (60) days from the approval of the Act. Also, every three (3) years after the effectivity of the Act, Congress must conduct a “sunset review” evaluating the Fund’s performance, impact, accomplishments, and whether it merits continued existence.
It takes effect fifteen (15) days after its complete publication in the Official Gazette or in at least two (2) national newspapers of general circulation, whichever comes first.