Doubling of Pag-IBIG payments to cost workers extra P8.9 billion

by Kobakila News

MANILA (Sept. 26) — The plan of the Home Development Mutual Fund (Pag-IBIG Fund) to double the mandatory monthly contributions of its 7.4-million members from P100 to P200 would cost workers an extra P8.9 billion, Catanduanes Rep. Joseph Santiago said today.<br /><br />”This is what Pag-IBIG hopes to collect additionally from its existing members – P8.9 billion every year, or P740 million monthly. This is a lot of money that will be taken out of the pockets of our workers, and which they could better spend for basic necessities,” Santiago said.

“This is why we are strongly opposed to the increase. It will definitely be an added tax on our workers, especially minimum wage earners. Small businesses too, particularly those with 10 workers or less, will be hurt because they’ll have to match the extra contributions of their employees,” Santiago said.

The 100-percent increase in payments would also cost the government another P1.7 billion in counterpart contributions as employer of 1.4 million civil servants, Santiago said.

Santiago said he would prefer that Pag-IBIG establish a special voluntary scheme on top of its mandatory program.

“Instead of compelling every member to contribute additionally, Pag-IBIG should just offer another scheme wherein those who can afford to pay more, and wish to avail of greater amounts of housing loans later on, may voluntarily participate,” he said.

Santiago made the statement not long after the Trade Union Congress of the Philippines headed by former Senator Ernesto Herrera rejected Pag-IBIG’s planned increase in mandatory payments.

Santiago expects Pag-IBIG’s plan to encounter tough resistance from other lawmakers, with Sen. Francis Escudero already publicly opposing it.

“In fact, Sen. Mar Roxas has a bill seeking to impose a two-year moratorium in the collection of existing Pag-IBIG contributions to give workers a reprieve from the rising cost of living,” Santiago pointed out.

Santiago said he favored Herrera’s proposal for Pag-IBIG to enlist new members in order to boost collections, instead of raising the mandatory payments of existing members.

“This is really the proper way to build up a fund – from the bottom up,” he said.

Herrera earlier lamented that in spite of mandatory Pag-IBIG membership, only one out of every four workers is actually covered by the fund. He said that while Pag-IBIG has 29.2 million potential member-workers — 27.8 million members of the Social Security System plus 1.4 million members of the Government Service Insurance System — the fund has managed to cover only 7.4 million of them.

At present, Pag-IBIG members contribute only two percent of their monthly earnings, with the salary ceiling at P5,000. Thus, most members contribute only P100 monthly, whether they are earning P5,000 or P50,000 every month.

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