Saturday, March 7, 2009

Pag-ibig Fund amendments: giving housing a lifeline

Written by Butch Fernandez / Reporter
Wednesday, 21 January 2009 18:56

THE Senate passed on second reading late Tuesday a bill amending the charter of the Home Development Mutual Fund (HDMF), or the Pag-IBIG Fund Law, in a bid to shield the housing sector from the ripple effects of the global economic meltdown.

“Through this bill, which strengthens the HDMF, we continue to acknowledge the right of every citizen to a decent home and sufficient shelter,” Sen. Edgardo Angara, its principal sponsor, said.

“With this in mind, we also consider the national economic benefits we can derive from a stronger housing sector and integrated nationwide provident savings system.”

Angara, who chairs the Committee on Banks, Financial Institutions and Currency, added that the Senate recently passed the Philippine Deposit Insurance Corp.’s (PDIC) charter amendments which provide for the hike in deposit-insurance coverage. “Now, as part of the twin efforts in hurdling the financial crisis, we give Pag-IBIG its much-needed lift in order to be an instrumental institution for housing credit.”

Among the key amendments the senators adopted in the Pag-IBIG Fund charter are restoration of the tax-exemption privilege of Pag-IBIG Fund; authority for the Pag-IBIG board of trustees to set contribution rates; and the adoption of a compensation plan for employees comparable with those prevailing in the private sector.

Angara pointed out that Pag-IBIG’s contribution rates have not changed since 1986, with employee and employer’s contributions pegged at 2 percent of a member’s monthly compensation, which shall not be more than P5,000. He said the new amendments delegate the authority to fix contribution rates from Congress to the Executive branch, through the fund’s board of trustees, subject to the approval of the President of the Philippines.

Another highlight of the bill, he added, was to allow the adoption of a compensation plan comparable with the ones prevailing in the private sector, also subject to the approval of the President of the Philippines.

Angara stressed the importance of the housing sector in terms of job generation, noting that in the 2009 budget, the housing sector received an allocation of P5.3 billion which is expected to create an additional 607,003 jobs.

“This key legislation provides Pag-IBIG Fund its much-needed boost especially in these tough times when we are experiencing tightening credit,” the senator said.

The Home Development Mutual Fund, more popularly known as the Pag-IBIG Fund, is a provident savings system created by Presidential Decree 1752 to motivate the employed and other earning groups to better plan and provide for their housing needs.

The fund is mandated to generate savings through membership in an integrated nationwide savings system and to mobilize the provident funds of its members for housing purposes.

Meanwhile, Angara said the swift passage of three major financial reforms would help push and build up the capital market and strengthen the financial sector of the country in the advent of the global financial turmoil.

He said these financial-reform measures include the passage of the budget oversight commission, PAG-IBIG bill and the new PDIC charter. “By strengthening the financial system, capital markets are built up and more businesses will thrive, thereby broadening the government’s tax-revenue base. Only then will our country’s fiscal position truly improve and stabilize,” he said.

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