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.
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.