Law Summary
Declaration of Policy
- Establish a viable, tax-exempt mutual provident savings system nationwide.
- Focus on employed and earning groups.
- Promote housing needs planning through Fund membership.
- Mandatory employer contributions promote social justice and national development.
Objectives
- Improve citizens’ quality of life through housing.
- Provide integrated nationwide provident savings.
- Mobilize funds for housing finance.
Key Definitions
- "Board": Board of Trustees of the Fund.
- "Compensation": Basic salary plus mandated COLA.
- "Contributions": Payments by members and employers.
- "Dependents": Legal dependents per Family Code.
- "Employee": Person working for an employer for compensation.
- "Employer": Any entity employing persons in or outside the Philippines including government units.
- "Employment": Service within Philippines; foreign entities may join via agreement.
- "Fund": The government financial institution mobilizing provident funds mainly for shelter finance.
- Other terms include GSIS, SSS, investible funds, membership term, permanent total disability.
Fund System
- Establishes Pag-IBIG Fund as mutual provident savings system for private and government employees.
- Body corporate replacing earlier Fund under PD No.1752.
Coverage
- Mandatory for employees under SSS and GSIS and their employers.
- Includes uniformed services.
- Includes Filipinos abroad working for foreign employers.
- Spouses managing households may join voluntarily.
- Board may extend coverage to other groups.
Contributions
- Members contribute based on salary tier (1% or 2%).
- Employers contribute 2%, matched to employee’s monthly compensation.
- Maximum monthly compensation for contribution base capped (currently P5,000).
- Employers prohibited from recovering employer’s share from employees.
Membership Term
- Twenty (20) year term unless terminated earlier for retirement, disability, etc.
- Withdrawal of accumulated value after 15 years allowed if no outstanding loans.
- Employment suspension or layoff doesn’t automatically terminate membership.
Waiver/Suspension of Coverage
- Possible for specific reasons such as nature of employment and business conditions.
Provident Character
- Fund owned by members, administered in trust.
- Contributions credited individually, transferable.
- Dividends may be earned.
- Fund constitutes each member’s provident savings.
Housing Loans
- Members in good standing eligible for housing loans with terms set by the Board.
- Special policies favoring lower-income members.
Implementing Body
- Pag-IBIG Fund is the entity implementing the Act.
Powers and Functions of the Fund
- Formulate and amend rules for Fund operations.
- Approve budgets and expenditures.
- Submit annual reports to the President.
- Invest at least 70% of investible funds in housing.
- Acquire and manage assets.
- Maintain accounting, actuarial studies, and data collection.
- Exercise corporate powers including contracting, borrowing, investing.
- Approve personnel appointments and compensation systems exempt from civil service salary laws.
- Maintain provident fund for staff benefits.
- Design early retirement incentive plan.
- Establish field offices.
- Authorize restructuring and collect unpaid contributions with interest and penalties.
- Deputize legal staff as special sheriffs for enforcement.
- Design additional savings/mobilization programs.
- Readjust benefits, contributions, and rates based on actuarial studies.
Board of Trustees Composition
- Chairperson of Housing Council (ex officio Chairman).
- Secretaries of Finance, Labor, Budget, Trade Departments (ex officio members).
- Fund’s CEO member.
- Five appointed members representing private employees, private employers, government employees.
- Terms and per diem provisions.
Powers of the Board
- Formulate policies and rules.
- Authorize Fund expenditures.
- Approve annual and supplemental budgets.
- Condone loan and contribution penalties for justifiable cases.
- Approve Fund’s organizational structure and compensation.
- Exercise necessary powers for Fund’s purpose.
Rule-Making Authority
- Authorized to make rules on administration, membership termination, fund earnings, benefits, contributions, loans, claims adjudication, and coverage optimization.
CEO Responsibilities
- Execute Board policies.
- Direct and supervise Fund operations.
- Appoint, discipline staff abiding civil service laws.
Investment of Fund Monies
- Invest using prudent standards for safety, growth, liquidity.
Tax Exemptions and Protection
- Fund and its assets are tax-exempt.
- Benefits paid out are free from taxes and legal claims except debts to Fund.
- Confirms immunity from tax measures unless expressly revoked.
Government Guarantee
- Government ensures Fund solvency and guarantees benefits.
Administration Costs
- Limited to not more than 2% of Net Fund Assets (exclude lending costs).
Audit Provisions
- Commission on Audit acts as ex officio auditor.
- Power to appoint representatives for Fund audit.
- Option for independent additional audit.
Remittance of Contributions
- Employers must set aside and remit contributions as per Board rules.
- Penalties of 3% monthly on late payments.
- Government bodies must include contributions in annual budgets.
- Administrative liability for officials who fail remittance.
- Fund may collect unpaid contributions in manner similar to tax collection.
- 20-year period for action on delinquency claims.
Employment Records and Reporting
- Employers must report employee data promptly.
- Keep accurate work records.
- Allow Fund inspection quarterly or more often.
Penal Provisions
- Noncompliance with registration, contribution, remittance rules punishable by fines up to double amount involved, imprisonment up to 6 years, or both.
- Corporate officers liable for violations.
- Government officials liable for failure to budget or remit contributions.
Continuity of Previous Fund
- Members and benefits from PD No. 1752 Fund transferred and integrated.
Visitorial and Enforcement Powers
- Fund may inspect premises, books, require reports.
- Government agencies may supervise certain Fund aspects.
Implementing Rules
- Board must issue rules within 90 days of enactment and publish nationally.
Separability Clause
- Invalid provisions do not affect remainder of the Act.
Repealing Clause
- Repeals prior Acts and PDs inconsistent with this law.
- Amends other laws accordingly.
Effectivity
- Law takes effect 15 days after publication in Official Gazette or national newspapers.