Savings

Money Matters: Pag-IBIG Fund Provident Savings and Provident Claims

Every member of the Home Development Mutual Fund — or anyone who desires to be one – should know that there are basically three types of benefits that are available to qualified members. They are the following:

1. Short-Term Loan — This is the Multi-Purpose Loan Program of the Pag-IBIG Fund that is payable in 24 months. The one thing that makes it unique is that the loan amount that can be granted to you is dependent on your “savings” with the fund. Let’s discuss the savings part in the succeeding paragraphs. A lot of people call it with many names such as personal loan, salary loan, cash loan, etc. It doesn’t matter what name you call it, you can use the proceeds anyway you want.

Click this link to know more about the Pag-IBIG Short-Term Loan Program.

2. Housing Loan — To many of its members, the Pag-IBIG Fund is almost synonymous with Housing Loan. This is a long-term home loan program that qualified members can tap in order to finance the purchase of a real estate in the Philippines. The article entitled Pag-IBIG Housing Loan 101 is a good place to start learning about this program.

3. Provident Savings — Your contributions to the Fund are like your Time-Deposit Account in the bank. It earns interest overtime and you can withdraw it, too. We’ve already mentioned a few things about this in the past article, but here we’ll elaborate more in this article, so keep reading.

Provident Savings — What Is And How It Works

Pag-IBIG Money Savings and Claims I searched for the meaning of the word “provident” and I got a good response. Provident (an adjective) means “making or indicative of timely preparation for the future.” Thanks Google, I don’t have to open my good old dictionary.

The meaning of the word “savings” should be easy, right? It is explained below.

Savings here refer to your membership contributions to the Pag-IBIG Fund. If you really think about it, that’s your own money that you “saved” with the fund. If you are locally employed in the Philippines, you know for a fact that your employer is also mandated by Law to contribute to your savings.

The Pag-IBIG Fund is one huge organization that pools together all the savings of all its members and invests that money by financing real estate development projects and mortgage loans which would eventually be beneficial to its members. As such, this money is expected to grow, or earn, over the course of time.

As a member, you must also be aware of the term Total Accumulated Value (TAV), which is your total contributions plus that of your employers (if you are employed) and the dividend earned by that money.

So essentially, Provident Savings is the TAV money which you can claim in some future time as a result of becoming a member of the Pag-IBIG Fund.

Provident Claims Or How To Withdraw Your Money

This part is exciting and irritating as well.

Here’s a minor irritation you have to deal with: you can’t just get your money anytime you need it. There are set guidelines on when you can apply for provident claims.

Here are the six instances when you are entitled to get your money from the Pag-IBIG Fund. The document requirements are also listed for each of the respective category of provident claims.

1. Membership Maturity – Regular members of the Pag-IBIG Program or the Pag-IBIG I can apply for provident claims upon maturity of their membership. Maturity here means having made an equivalent of 240 monthly contributions, so that’s roughly 20 years. (See the Basic Document Requirements below.)

Members of Pag-IBIG Overseas Program have their maturity date set from 5 to 20 years. They are advised to have their POP Passbook when applying for the provident claim.

2. Retirement – The retirement can be as early as 45 years old to the mandatory age of 65. The following are the important documents to bring:

Notarized Certificate of Early Retirement (For Private Employee, at least 45 years old)
SSS/GSIS Retirement Voucher or any two valid IDs
For AFP, Philippine Navy and Army Personnel (Any of the following: Order of Retirement, Updated Statement of Service, Statement of Last Payment )

3. Separation from the service due to health reasons

Important Documents:

Physician’s Certificate/Statement
Notarized Sworn Employer’s Certification that member was separated from the service due to health reasons
Latest SSS Disability Voucher (For Private Employee)

4. Permanent and Total Disability or Insanity

Important Documents:

Physician’s Certificate/Statement of Insanity
SSS Total Disability Voucher (If Private Employee)
For AFP, Philippine Navy and Army Personnel: ( Updated Statement of Service, Statement of Last Payment, Compulsory Disability Discharge Order)

5. Permanent Departure from the country

If you have another to call home and you finally said goodbye to the Philippines, here are some documents to prepare:

Notarized Sworn Declaration of Intention to Depart from the Philippines Permanently
Photocopy of Passport
Any of the following : Immigrant Visa, Residence Visa, Settlement Visa

6. Death

That dreaded word. Beneficiaries or heirs should prepare the following documents:

Member’s Death Certificate issued by NSO
Certification from Funeral Parlor
Notarized Proof of Surviving Legal Heirs
Notarized Affidavit of Guardianship (For children 18 years old and below, or physically/mentally incompetent)
Birth Certificate of all Children, if any, issued by NSO or Baptismal/Confirmation Certificate

To establish relationship with the deceased member, the claimant shall submit any of the following:

Member’s / Claimant’s Birth Certificate issued by NSO
Member’s Marriage Contract, if married, issued by NSO
Certified True Copy of Member’s/Claimant’s Baptismal/Confirmation Certificate
Certificate of No Marriage (CENOMAR) (For Single Only)

Basic Document Requirements

On top of the document requirements above, the following document should come handy:

Duly accomplished Application for Provident Benefits (APB) Claim
Two (2) valid IDs
Updated Service Record (For government employees)
Special Power of Attorney and two (2) valid IDs each of the Principal and Attorney-in-Fact (If member cannot claim personally)

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“Money Matters: Pag-IBIG Fund Provident Savings and Provident Claims” is written by Carlos Velasco.

7 Most Popular How-To’s On Pag-IBIG Fund

by Pag-IBIG Financing Admin

Since this website has been online, the Pag-IBIG Financing Team has encountered questions that are repeatedly asked by site visitors. Of course, we have made the FAQ section to address some of the most common questions that they raise. But, as it appears, a lot of folks seem to overlook that page when searching for the answer to their questions. That section should be the first stop for anyone who wish to find some answers related to Pag-IBIG Fund and its services.

This article is also a handy guide to the How-To type of questions that we received from site visitors.

We hope that by providing this, you’ll easily get access to the right information that you are seeking. Please browse the whole article to see if you also have similar queries.

1. How To Apply For A Pag-IBIG Housing Loan

This is one is the favourite questions of most Pag-IBIG Fund members. Here’s a sample inquiry that we received: “I would to ask how can I make a loan. I was planning to buy a parcel of land somewhere in Laguna but I have no idea on how to apply for the loan and what the procedures are.”

Best Answer: The Pag-IBIG Housing Loan Process.

2. How To Pay the Pag-IBIG Fund

For the locally employed Filipinos, this one should not be a problem since their employers should take care of this by way of salary deduction.

But for the self-employed and the Overseas Filipinos, here are some of the best ways to send your payment: 5 Ways To Pay The Pag-IBIG Fund.

Note: You may choose to pay monthly or quarterly. It is always best if you can pay over the counter, at the collecting office. And for all your payments, make sure that you keep the Official Receipt as evidence of the payment.

3. How To Apply As Voluntary Member

The mandatory membership to the Pag-IBIG Fund has already been expanded to include the Overseas Filipino Workers. Please consult article we had about the Home Development Mutual Fund Law of 2009 to check if you are under the mandatory coverage or not.

Now, here’s a list on who can become voluntary members to the Pag-IBIG Fund.

Non-working spouse, provided the other partner is also a member
Filipino employees of foreign government or international organization, or their wholly-owned instrumentality based in the Philippines, in the absence of an administrative agreement with the Fund
Leaders and members of religious groups
A member separated from employment, local or abroad, or ceased to be self-employed but would like to continue paying his/her personal contribution
Public officials or employees who are not covered by the GSIS

Here’s how to apply as a voluntary member.

4. How To Apply For A Short-term Loan

pag-ibig financing how-to Whether you want to call it a Personal Loan, a Salary Loan or by any other name, it belongs to the Short-term Loan program of Pag-IBIG.

Here’s how to apply for a short-term loan.

5. How To Withdraw Your Savings

Take note that your total savings, also called Total Accumulated Value, is the sum total of all your contributions, that of your employers (if applicable), plus the accumulated dividends.

But, you can’t just withdraw it anytime as you would your savings bank account. You should know about specific guidelines on how to withdraw that money.

6. How To Check If You Qualify For a Home Loan

Nothing can be so annoying than spending some previous time applying for a home loan only to be denied because you did not qualify. You can do a lot in the way of preparation.

Here’s how to do a pre-qualification before you go to the office and apply for a home loan.

7. How To Check My Membership Status, Contributions and Payments, etc.

There are some questions that only the Pag-IBIG Office or branch can answer. This one is among them.

However, you may want to read this Q and A about your Pag-IBIG Membership.

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“The 7 Most Popular How-To’s On Pag-IBIG Fund” is written by Carlos Velasco.

Long Term Mortgage Loan — How To Retire It Early, Part 2 of 2

by Pag-IBIG Financing Admin

In Part 1 of this series, you’ve learned that long term home financing could be very expensive in the long run while at the same time it also makes an expensive property look more affordable on a monthly basis.

For many, getting a home loan is the only way to ever achieve their dreams of owning a home.

However, for those who are into real estate investing and know what they are doing, a long term loan could just be another form of leverage that should be taken advantage of.

As pointed out in the previous series, here we’ll touch on the factors to consider when retiring a long term housing loan earlier than its maturity period such that it becomes advantageous on your part as a borrower or investor. Each one of those factors is cited elaborated in the succeeding paragraphs.

Factor #1: Second Property Investment

In one of our conversations, I mentioned to a friend how lucky he was for inheriting a nice home from his parents. It turns out that each one of his siblings (there are four of them) also inherited a property in another place in the same city. He said he was very thankful to his father for all of these. When his father was still younger, he planned about investing exactly four properties and intended to give them to his children. I was really laughing when he said his father made sure these properties are located in the North-, South-, East- and Western parts of the city!

Did you know that Pag-IBIG allows you to have up to two housing loans? Of course, you have to do it one at a time. In other words, you can take on another housing loan provided your previous loan is already paid off completely. And for the second and third housing loan, you still have to undergo the qualification process just like you did when you got your first housing loan.

Is this something you have thought about already?

Ask yourself, “Am I willing to pay off this loan to get another property?”

Factor #2: Liquidity

real estate liquidity Do you know someone whose hobby involves collecting some stuff? You know…old coins, postage stamps, vintage cars, and others.

I’ve met someone whom a lot of brokers would consider a real estate investor. And his hobby? Collecting vacant real estate properties!

Now if you would want to be in this kind of hobby, I would suggest that you get to know what you are getting into. Always have an exit plan in place, just in case something wrong happens that you can’t take it anymore.

The funny thing about real estate brokers is that they are selling properties which they themselves would not even invest. The common reason they say is that a real estate is a dead investment! (Now you know.)

Is there such a thing as a dead investment?

Let me explain it this way: Suppose you have purchased a property a year ago and then suddenly something happened that puts you in an awkward position to want some money – very, very badly. And then you think, one of the ways to raise that amount of money you needed is to sell a piece of real estate that you own. Finally, here’s the catch: “How can you sell the property at the price that you wanted without incurring a loss?”

In an emergency sale, the seller is usually willing to negotiate down the price in exchange for the much more liquid equivalent: CASH.

A dead investment is really just a fancy word for an investment in illiquid asset, such as real estate. It could also mean an investment that does not generate a passive income to the owner.

Ask yourself, “Do I have enough cash in reserve such that I won’t resort to selling my real estate at a loss when an emergency happens?”

Factor #3: Savings

When you retire a loan earlier, you most likely need to you slash your cash reserve to do that. Now that money in some way of another could be earning an interest. Once you use it to pay off the remaining loan balance, you also kill the chance for it to earn the intended interest.

When paying off your loan early, see to it that the money you use to pay off the remaining balance is earning much lower than the interest rate of your mortgage.

Say you have P 700k loan balance and you have that much cash in reserve. Now, compare the interest it will earn if you invest that money versus the interest rate of the loan. If that money is earning you 15% annually — a good rate, by the way – and your mortgage is currently at 10.5% per annum, you are better off not paying the whole balance yet.

However, if your money is giving you a mere 2.5% per annum, plus some more headaches here and there, it would be wise to use that money to pay off your loan balance.

Ask yourself, “How does the interest rate of my mortgage compare with my interest if I would invest the money I’m planning to pay it off with?”

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“Long Term Mortgage Loan — How To Retire It Early” is written by Carlos Velasco. This is the second part of a two-part series. Read the first part here.

Your Money In Pag-IBIG Fund

by Pag-IBIG Financing Admin

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.

Is It A Mutual 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. If not for the last statement, the Pag-IBIG Fund could have qualified for a Mutual Fund Company. In other words, the usual definition of a “Mutual Fund” doesn’t apply here.

Pag-IBIG Fund and Cooperative Setup — It’s easier to think of Pag-IBIG Fund as a cooperative rather than a Mutual Fund.

Here are some important points to bear in mind:

In the Philippines, a Mutual Fund is an investment company, owned by its shareholders who are also the investors in the fund. Pag-IBIG Fund is organized, owned and controlled by the government. Members of the Pag-IBIG Fund are not shareholders.
A Mutual Fund investors can withdraw (redeem shares) anytime. Pag-IBIG Members has to wait for a maturity date to claim their savings money.
Anyone can invest in a Mutual Fund — even foreigners. Pag-IBIG Fund is limited to members only.
You can’t loan against your investment money in a Mutual Fund. With Pag-IBIG, you can take out a Personal Loan or a Housing Loan.

( To learn more about Mutual Funds and Investments in general, please head over to this article on PeraTree.com. )

It’s easier if you think of Pag-IBIG Fund as a cooperative, rather than a mutual fund. That’s the best analogy I can come up with.

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.

Armed with the information above, I’d like to ask a few questions about your money and savings in relation to your Pag-IBIG Fund Membership.

Is it wise to contribute more money to your membership fund with Pag-IBIG?
What are the pros and cons of putting more money in excess of the minimum requirement by the Pag-IBIG Fund?
Should you approach Pag-IBIG Fund as a reliable source of retirement fund?

That’s something for you to think.

Benefits of Becoming A Pag-IBIG Fund Member

by Pag-IBIG Financing Admin

It’s a deplorable fact: A lot of Pag-IBIG Fund Members, especially the employees, are not aware of the benefits they can derive from becoming (forcibly, since it is mandatory) a member of the Pag-IBIG Fund. For some, getting a payroll deduction for Pag-IBIG contribution is an automatic acceptance of something that is unavoidable -– no questions asked, no complaint unless the net salary is already far too low to even pay for electric bill. After all, there must be some deductions to the salary just like Income Tax, SSS or GSIS, right?

Well, since you are already at it and since it is an inescapable fact that you (and your employer) will be deducted with Pag-IBIG contribution, wouldn’t it be good also if you know where your money is going and what you are getting in return? After all, that’s still your money.

Here, we’ll discuss the three benefits you can get by participating in Pag-IBIG Fund. This is applicable to any member of the Fund : employees, OFW’s under Pag-IBIG Overseas program, and voluntary members alike.

If no one has explained this to you in the past, please read it carefully and share it to any Pag-IBIG Member whom you care about.

Okay, without so much talk, here are the three basic benefits you can get from being a member of Pag-IBIG.

Housing Loan
Short Term Loan
Provident Savings

That’s it. Only three benefits so far and you need to remember and understand those. Detailed explanation of each one follows next.

Housing Loan — This is perhaps the most popular program benefit of the Pag-IBIG Fund. Any member knows a little bit about this. In fact, the mere mention of the term “Pag-IBIG Fund” almost always translates to Housing Loan.

One of the mandates of Pag-IBIG Fund is to be of assistance to the public in providing cheap financing for their housing needs. Pag-IBIG accomplishes this by working in partnership with the local Real Estate Developers and arranging affordable loans to real estate buyers (Pag-IBIG members).

An affordable loan means lower interest rate compared to the prevailing rate in the market and payable in longer terms. At the time of this writing, Pag-IBIG Fund offers a home loan at a low interest rate of 6% (for PhP 400,000 loan) with a loan term of up to 30 years. A qualified member can get a maximum loan amount of up to 3 Million Pesos.

Short Term Loan — Just like SSS and GSIS, Pag-IBIG Fund also offers financial assistance to qualified member by granting short term loan.

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 whatever reasons: financing a micro-business or buying the latest toy you have been dying to get.

So, the next time you need money, before asking from your friend (who has every doubt if you can ever pay him back), try your luck at Pag-IBIG Fund.

Provident Savings — This is something that a lot of members are not aware of. If you are one of them, pay attention to this part.

Another way of looking at your contributions to Pag-IBIG is to consider it as your savings, which you can withdraw at maturity date. Pag-IBIG Fund makes it very clear that your contributions, plus that of your employer will earn dividend. Now, you can get all that money, called Total Accumulated Value (contributions plus dividend), when it reaches maturity.

Unlike the money in a bank regular savings where the interest rate is given, your earnings in Pag-IBIG is not readily foreseen ahead of time. In other words, you are essentially participating in an investment and your earnings will depend on the overall performance of that investment.

Speaking about Savings under Pag-IBIG Fund, you may also want to check the Pag-IBIG II Program, which is another investment option from Pag-IBIG and is available only to its members.

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This article on the Benefits of Becoming Pag-IBIG Fund Members is written by Carlos Velasco.