The Definitive Guide to Pag-IBIG Contribution Computation (2024 Update)

Effective February 2024, the Home Development Mutual Fund (Pag-IBIG Fund) implemented a significant adjustment to the mandatory monthly savings (contributions) of its members. This update, the first major change in decades, aims to strengthen the fund's capacity to finance housing loans and provide better returns for its members.

As experts in Philippine labor standards and social legislation, we provide this guide to ensure 100% accuracy in computation for both employees and employers.

The Core Update: Maximum Fund Salary (MFS)

The most critical change revolves around the Maximum Fund Salary (MFS), the ceiling for calculating contributions.

Previous MFS

P5,000

New MFS (Effective Feb 2024)

P10,000

This increase means a larger portion of the salary for those earning above P5,000 is now subject to mandatory contribution, resulting in higher overall savings.

Complete Pag-IBIG Contribution Rates

While the MFS has changed, the contribution rates from Pag-IBIG Circular No. 460 remain. Applying the correct rate is crucial for compliance:

1. Salaries of P1,500 and Below

  • Employee Share: 1% of Monthly Salary
  • Employer Share: 2% of Monthly Salary

2. Salaries Over P1,500

  • Employee Share: 2% of Monthly Salary
  • Employer Share: 2% of Monthly Salary

The New Maximum Mandatory Contribution

If an employee earns P10,000 or more, the calculation is capped at the MFS:

P10,000 (MFS) x 2% = P200

Therefore, the new maximum mandatory contribution is:

  • Maximum Employee Share: P200
  • Maximum Employer Share: P200
  • Total Maximum Monthly Savings: P400

"Ang halagang ito ay nakabatay sa dalawang porsyento (2%) ng Maximum Fund Salary o MFS na ngayon na nasa P10,000."

- Pag-IBIG Fund

Pag-IBIG Contribution Table (Effective February 2024)

The following table illustrates the computation across various salary levels.

Monthly Salary Employee Rate Employee Share Employer Rate Employer Share Total Contribution
P1,400 1% P14.00 2% P28.00 P42.00
P1,500 1% P15.00 2% P30.00 P45.00
P1,501 2% P30.02 2% P30.02 P60.04
P8,000 2% P160.00 2% P160.00 P320.00
P10,000 2% P200.00 2% P200.00 P400.00
P20,000+ 2%* P200.00 2%* P200.00 P400.00

*Computation basis is capped at the MFS of P10,000.

Scenario Analysis

Understanding how the rules apply in practice is essential for accurate payroll.

Scenario 1: Salary Below MFS

An employee earns P8,000/month. The actual salary is used as the base.

Formula: P8,000 x 2%

  • Employee Share: P160
  • Employer Share: P160
  • Total: P320

Scenario 2: Salary At MFS

An employee earns P10,000/month. The MFS is the base.

Formula: P10,000 x 2%

  • Employee Share: P200
  • Employer Share: P200
  • Total: P400

Scenario 3: Salary Above MFS

An employee earns P20,000/month. The base is capped at the MFS.

Formula: P10,000 x 2%

  • Employee Share: P200
  • Employer Share: P200
  • Total: P400

Scenario 4: The 1% Rule

An employee earns P1,400/month. The employee rate is 1% and employer rate is 2%.

  • Employee: P1,400 x 1% = P14
  • Employer: P1,400 x 2% = P28
  • Total: P42

Voluntary Contributions

"Gayunpaman, maaaring maghulog ang miyembro ng higit sa halagang ito." (However, the member may contribute more than this amount.)

- Pag-IBIG Fund

Scenario 5: Voluntary Increase

An employee earning P20,000 wishes to contribute P1,000 monthly. The employer's share remains tied to the MFS.

  • Total Employee Share (Deduction): P1,000
  • Mandatory Employer Share: P200
  • Total Monthly Savings: P1,200

Why Contributions Matter: It's Savings, Not a Tax

These contributions directly benefit the member and are not a tax.

"Ang bawat hulog sa Pag-IBIG ay ipon ng miyembro, na taun-taon ay may tubong dibidendo, at buong ibabalik sa oras na ito ay mag-mature, magretiro ang miyembro o sa iba pang kadahilanan."

- Pag-IBIG Fund

The increased contribution translates to:

  • Higher Total Accumulated Savings (TAS).
  • Potentially higher annual, tax-free dividends.
  • Increased eligibility for loans (Multi-Purpose, Calamity, and Housing).

Employers are advised to ensure their payroll systems are updated to reflect these changes for full compliance with Philippine labor regulations.