Monthly contribution to the Home Development Mutual Fund — 2% by employee and 2% by employer on the first ₱5,000 of monthly compensation.
The Home Development Mutual Fund (HDMF), commonly known as Pag-IBIG Fund, is the mandatory savings and housing finance program for Filipino employees. Both employee and employer contribute 2% each of the employee's monthly compensation, but the mandatory contribution base is capped at ₱5,000 — making the maximum mandatory contribution ₱100 from the employee and ₱100 from the employer (₱200 total).
Employees who earn more than ₱5,000 per month can opt to make voluntary contributions beyond the mandatory amount — they can choose to base contributions on their actual salary up to a higher ceiling. Employers must match the voluntary portion as well if the employee officially files an election to increase contributions.
In practice: Ana earns ₱25,000 per month. Mandatory Pag-IBIG deduction: 2% × ₱5,000 = ₱100 (employer contributes another ₱100). Ana's total Pag-IBIG contribution is ₱100/month mandatory. She may opt to contribute on a higher base (e.g., 2% × ₱10,000 = ₱200 from her) to build up her Pag-IBIG savings for a future housing loan.
Why it matters: While the mandatory contribution amounts are relatively small, Pag-IBIG membership is the gateway to housing loans with below-market interest rates — one of the most significant benefits for employees. Employers who fail to remit Pag-IBIG contributions (even the modest ₱200/employee/month) expose employees to loss of housing loan eligibility and face penalties under RA 9679.
Remittances are due by the 10th or 15th of the following month (depending on employer size). Like SSS, non-remittance is a criminal offense with personal liability for responsible corporate officers.