This article is a must read for every Pag-IBIG Member whether active or inactive. If you are a member, please read carefully. If you know someone who is a member, please share it.
How Your Money Enters The Pag-IBIG Fund
The moment you become a member of the Pag-IBIG Fund, that’s the first time your money enters into the Fund. For some, there is really no choice. All employees who are covered by SSS and GSIS are mandated and required to also contribute to the Pag-IBIG Fund. Others are voluntarily contributing to the Fund.
What is a Mutual Fund?
It’s ironic, a lot of Pag-IBIG Fund members are not aware that the Pag-IBIG Fund is a Mutual Fund company, let alone know what a Mutual Fund is.
If you are one of them, don’t despair, you have come to a place that can help you get educated on the intricacies of the Pag-IBIG Fund.
First things first. Pag-IBIG Fund is just a fancy term for Home Development Mutual Fund. That’s a handy term to help you remember it easily. Unfortunately, it also blinds you to a lot of other things about the company and what it does with your money.
Next, let’s talk about Mutual Fund. Let’s call on Investopedia.com to assist us on the definition of the term Mutual Fund:
“A mutual fund is nothing more than a collection of stocks and/or bonds. You can think of a mutual fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund.”
That definition says a lot of things. In relation to Pag-IBIG Fund, it means that you and other members have come together to pool their money (called Fund) and invest it on something. That something is determined by the company, or the Mutual Fund manager. So essentially, as a member of the Pag-IBIG Fund, you are also an investor of the Fund.
Pag-IBIG Money As Savings: How Your Money Earns in Pag-IBIG Fund
Pag-IBIG says that you are saving money when you are contributing to the Pag-IBIG Fund.
In a way, yes. You and your employer have combined to save in the Fund. But, unlike a regular bank savings that you have been accustomed to, your money has no fixed rate of return. That money is being invested and its earnings vary and depend a lot on so many factors. At the end of the year, your savings will earn an annual dividend which is also automatically credited to your total savings. The total savings is also referred to as Total Accumulated Value (TAV), and it includes your contributions, your employer’s contributions plus all the dividends it earns.
Provident Claims: How To Withdraw You Money
Now comes the itchy part: How do you withdraw your savings?
(A lot of our OFW visitors are asking how to withdraw their contributions in Pag-IBIG since they are no longer active. We hope this article helps.)
You may be surprised, but your savings with Pag-IBIG is not as liquid as your regular bank deposit. In other words, to withdraw it, you have to wait… 20 years or so, that’s the maturity period of your money.
Here are the instances where you are allowed to withdraw your money in Pag-IBIG.
- The member has been contributing for 20 years and after having made a total of 240 contributions.
- Upon retirement (early retirement at age 45; optional retirement at age 60; mandatory retirement at age 65)
- Permanent departure from the country
- Total Physical disability or Insanity
- Termination from service for health reasons
- Death of the member (of course, your beneficiaries will be the one to claim it)
- For members who have registered under RA 7742 and RA 9679, you may withdraw your money after 10 years or 15 years of continuous membership.
Your Money In Pag-IBIG Fund is written by Carlos Velasco.