Pag-ibig Monthly Contribution Computation
“Home Development Mutual Fund Law of 2009, otherwise known as Pag-IBIG (Pagtutulungan sa kinabukasan: Ikaw, Bangko, Industriya at Gobyerno) Fund” objectives are:
- To improve the quality of life of its citizens by providing them with sufficient shelter;
- To provide for an integrated nationwide provident savings system; and
- To provide housing through mobilization of funds for shelter finance.
If you want to own a house, but you are luck of resources, housing loan through Pag-IBIG fund will definitely first to your option and can be considered the best one especially to those average income earners.
To become eligible, you must be a member for not less than 24 months (2 years) as evidenced by monthly contributions. However, Pag-IBIG Fund consider members with at least 12 months as long as they will make lump-sum payment for the remaining period to meet the requirements.
How to compute for HDMF/Pag-IBIG Fund monthly contribution?
All covered employees and employers shall contribute to the Fund based on the monthly compensation of the employees as shown below:
- Employees earning not more than One thousand five hundred pesos (P1,500.00)per month – one percent (1%).
- Employees earning more than One thousand five hundred pesos (P1,500.00) per month – two percent (2%).
- All employers – two percent (2%) of the monthly compensation of all covered employees.
Illustration 1:
Mr. Salvador, an employee of DTL Grocer has a monthly salary of P4,800.00
1. What amount will be deducted from Mr. Santos salary?
Answer: P96.00
P4,800 x 2% = P96.00
2. How much is the company’s share?
Answer: P96.00
P4,800 x 2% = P96
3. What is the total monthly HDMF contribution to be remitted by the employer?
Answer: P192.00, remit using MCRF
Illustration 2:
Juan Zamora works in K&E Accounting Services as accounting assistant. His monthly salary is P16,000.00.
1. What amount will be deducted from Juan’s salary?
Answer: P100.00
The maximum monthly compensation used in computing for contribution is P5,000.00.
Therefore, the maximum monthly contribution is P200.00 (P100.00 from employer and P100 from employee).
2. How much is the total premium shouldered by the employer?
Answer: P200.00, the minimum monthly premium
What is the proper treatment of HDMF/Pag-ibig contribution in company’s accounting records?
- Employee’s share is deduction from employee’s salary, therefore a reduction (debit) to salaries payable.
- Employer’s share is an outright expense classified under employee benefits account.
- HDMF/Pag-ibig Contribution to be remitted by the employer is a payable account (currentliability). It will be debited once remittance is made.
Pag-ibig Monthly Contribution Computation
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