As per RA 9679, membership to the Home Development Mutual Fund (HDMF) or popularly known as Pag-IBIG fund, has become mandatory for all employees, workers, professionals, officers and companies who are also compulsorily covered by the SSS and GSIS. The amount of monthly contribution is at 1-2% of the salary with P5000 used as the maximum monthly compensation used in the computation. Basically, that is the P100 employee and P100 employer share you may have noticed in your payslips.
For me, I have been saving more than this minimum amount for several years already. I have increased the amount every time I received salary increases. So here are the primary reasons on why I chose to increase my monthly HDMF Contributions.
- It serves as forced savings for me.
I may have said it previous blogs that I am not very thrifty. However, I know the importance of savings and investments. Savings that are auto deducted from my gross pay works best for me. With Pag-IBIG Contributions, I no longer need to worry about setting aside money for this as it is already deducted from my pay.
Also, savings in Pag-IBIG are not accessible. Our monthly savings, employer counterpart share (if any) and total annual dividend earnings comprise the member’s Total Accumulated Savings or TAV. Our TAV can be withdrawn after 20 years of continuous membership, upon retirement at age 65, separation of service due to health reason, permanent departure from the country or upon death and total disability. This means my savings here will surely go to my retirement fund and will have the chance to grow over time.
- Annual dividend earnings that are government-guaranteed.
The Pag-IBIG Savings Program is a fast, easy and affordable way for Pag-IBIG members to save for the future. The dividend rate is not fixed, but as far as I’m concerned, any dividend rate is most likely higher than any bank saving account interest.
There are several UITFs and Mutual Funds available in the market that also provides returns higher than bank interest. I also have those with other financial institutions, but what I see as advantageous with putting money with HDMF is that there is no fixed or minimum amount. So for those who cannot afford to set aside the usual P1000 or more monthly investment, we can just add up to our HDMF contributions for any amount.
- I might just avail a housing loan someday.
My family and I are currently living a cozy home within the city. It’s nothing big, but it is close to just everything. However, it is not exactly the dream home I had in mind when I was young and dreamy. Someday, my husband and I might just want to build our dream retirement home, and an HDMF housing loan might come handy.
There are two important factors that affect the loan amount you are entitled to. First is the amount of contribution and second is your net disposable income. If you want to avail of a bigger loan amount, you need to increase your contribution and show that your net disposable income is also large enough to cover the monthly contributions. I don’t have much control over our net disposable income, but we definitely control the amount of contribution.
- Higher contributions means higher loanable amounts.
Aside from housing loans, short term loans are also available for HDMF / Pag-IBIG members. There is a Calamity Loan for members affected by unforeseen calamity like flood, fire, volcanic eruption and other similar cases. There is also a Multi-purpose loan that you can use for any reason.
I many not have any urgent need for a loan right now, but who knows what might come in the coming years. Having an available credit line is added insurance to any possible financial issues.