Senate okays Pag-IBIG Fund Law amendments on 2nd Reading
ANGARA PITCHES IN FOR A STRONGER HOUSING SECTOR

Sen. Edgardo J. Angara today leads the continuous reform in the country's housing sector, in order to weather the Global Financial Crisis, as he stewards efforts in passing key amendments to the Home Development Mutual Fund or the Pag-IBIG Fund Law on 2nd reading.

"Through this bill, which strengthens the Home Development Mutual Fund or the Pag-IBIG, we continue to acknowledge the right of every citizen to a decent home and sufficient shelter. 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," said Angara who chairs the Senate Committee on Banks, Financial Institutions and Currency.

He added, "We recently passed the PDIC Charter amendments on 3rd Reading, which provides 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."

Angara leads the Senate in strengthening the Home Development Mutual Fund also known as the Pag-IBIG Fund, by introducing key amendments to the Presidential Decree 1752, as amended. The Senate recently passed the bill on 2nd reading.

The new Pag-Ibig Charter, as encompassed in the Committee report, proposes three (3) key amendments: (1) restoration of the tax exemption privilege of Pag-IBIG Fund; (2) grants power to Pag-IBIG Board of Trustees to set contribution rates and; (3) adoption of a compensation plan for employees comparable to the ones prevailing in the private sector.

The Pag-IBIG Fund Charter provides that "the Fund and all its assets, collections, receivables and increments... shall be exempt from the payment of any and all forms of taxes, assessment and charges." This privilege was revoked under E.O. 93, s. 1986, which stated that all tax and duty incentives granted to government and private entities were withdrawn.

However, RA 8424 or the Tax Reform Act of 1997, provides that "employees' trust which forms part of their pension, stock bonus... shall not be covered by the taxes stipulated in this [RA 8424] Act."

Cognizant of this provision, the Department of Finance (DOF) interposes no objection to the grant of tax exemption privileges to the Pag-IBIG Fund and has even granted tax subsidy to Pag-IBIG Fund.

Pag-IBIG's contribution rates have not changed since 1986. EO 35 pegged the employee and employer's contributions at 2% of a member's monthly compensation, which shall not be more than P5,000. 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 was to allow the adoption of a compensation plan comparable to the ones prevailing in the private sector, subject to the approval of the President of the Philippines.

Angara also stressed the importance of the Housing sector in terms of job generation. In the FY 2009 budget, Housing sector receives an allocation of Php 5.3 Billion. And by using the data provided by the Shelter Agencies, an additional 607,003 jobs will be created.

"This key legislation provides Pag-IBIG its much needed boost especially in this tough times when we are experiencing tightening credit." added Angara.

The Home Development Mutual Fund, more popularly known as the Pag-IBIG Fund is a provident savings system created under the Presidential Decree No. 1752. It was established 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.

The name Pag-IBIG Fund was coined during the tutelage of the Minister of Human Settlements and Regulatory Commission and former First Lady Imelda Marcos as the Fund's Chairman. It stands for "Pagtutulungan para sa kinabukasan: Ikaw, Ako, Industriya at Gobyerno."