Amendments to Home Development Mutual Fund Law

Republic Act No. 7742 reinstates Section 4 of Presidential Decree No. 1752, as amended, which was repealed by Executive Order No. 90.
Section 7 repeals specific subsections of Executive Order No. 90 and repeals or modifies inconsistent laws, executive orders, rules, or regulations or parts thereof.
Republic Act No. 7742 is an amendment statute that changes the operative rules governing coverage, contributions, membership term, and investment allocation of the Fund.

Republic Act No. 7742 implements a housing-finance structure through the Home Development Mutual Fund by setting mandatory or voluntary coverage rules, contribution rates, membership duration, and investment allocation for housing.

Section 4 makes coverage of the Fund mandatory for all employees covered by the Social Security System and the Government Service Insurance System, and their respective employers.
Section 4 makes coverage of employees whose Monthly Compensation is less than P4,000 voluntary.
Section 4 requires that when employees become members of the Fund, employers shall contribute in accordance with Section 5.
Section 4 allows the Fund’s coverage to be extended to other working groups, with or without employer contributions, as determined by the Board of Trustees.

Section 5 requires covered employees and employers to contribute based on the covered employee’s Monthly Compensation.
Employees earning not more than P1,500 per month contribute 1%.
Employees earning more than P1,500 per month contribute 2%.
Employers contribute 2% of the monthly compensation of all covered employees.
Section 5 defines “Monthly Compensation” as the basic monthly salary plus Cost of Living Allowance (COLA).
Section 5 sets a contribution computation ceiling: the maximum Monthly Compensation used for computing employee and employer contributions shall not be more than P5,000.
Section 5 prohibits the employer from deducting from the employee’s wages or remuneration, or otherwise recovering from the employee, the employer’s contribution.

Section 6 provides that membership in the Fund is for a period of twenty (20) years.
Section 6 allows earlier termination of membership due to retirement, disability, insanity, death, departure from the country, or other causes as may be provided for by the Board of Trustees.
Section 6 grants withdrawal options to those who become members after the effectivity of Republic Act No. 7742.
Section 6 allows qualified members to withdraw the total accumulated value of their contributions after the tenth (10th) or fifteenth (15th) year of continuous membership.
Section 6 conditions withdrawal on the member having no outstanding housing loans with the Fund.
Section 6 makes withdrawal exercisable only once and states that exercising the option shall not prejudice the member’s continuing membership in the Fund.
Section 6 states that resignation, lay-off, or suspension from employment may not necessarily constitute a ground for membership termination, except for suspension of contributions.

Section 10(c) requires the Fund to invest not less than seventy percent (70%) of its investible fund to housing, in accordance with Republic Act No. 7742.

Section 5 requires the Board of Trustees of the Home Development Mutual Fund to promulgate the rules and regulations necessary for effective implementation within sixty (60) days from the approval of Republic Act No. 7742.
Section 6 mandates a sunset review: every three (3) years after the effectivity of the Act, Congress conducts a systematic evaluation to determine whether the Fund’s performance, impact, or accomplishments with respect to its objectives or goals merit continued existence.
Section 6 directs that the sunset review be undertaken by the Committees of the Senate and the House of Representatives that have legislative jurisdiction over the Fund.

Section 7 repeals Section 10(b), (c), and (d) of Executive Order No. 90.
Section 7 repeals or modifies accordingly all laws, executive orders, rules, or regulations, or any part thereof, that are inconsistent with any provision of Republic Act No. 7742.

No penalties, sanctions, or fine provisions are established by Republic Act No. 7742.