May 26th, 2021
Salceda wants to transform Pag-IBIG Fund into PH’s “Central Provident Fund;” House tax chair wants to replicate Singapore model for pension, housing savings
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) wants to transform the Pag-IBIG Fund or the Home Mutual Development Fund (HDMF) into the country’s central provident fund (CPF)for housing, allowing the country to have enough funding and systems for mass housing programs similar to that of Singapore. Salceda wants to begin the process by allowing the HDMF to run the Employee Pension and Retirement Income (EPRI) Accounts to be created under the proposed Capital Market Development Act.
In amendments to House Bill No. 8938, or the Capital Market Development Act, Salceda proposed that the HDMF be allowed to run EPRI accounts and compete with private providers of corporate pension, similar to the National Employees Saving Trust (NEST) of the United Kingdom, which is a low-cost state-run fund which employers’ default to using if they are not able to choose any other provider or would prefer not to do so. The NEST competes with private pension providers but has the added security of being a government agency.
“Pag-IBIG is actually a very successful fund manager, with a regular 2020 dividend rate 5.62%, while the Modified Pag-IBIG 2 (MP2) Savings shall be at 6.12%. They achieved these returns even during a crisis. So, this is exceptional performance that deserves more contributions and a greater role in worker welfare,” Salceda said.
Under Salceda’s plan, the HDMF will gain more funds under management through running EPRI, which in turn would allow them to extend more housing loans and undertake centrally-planned housing programs similar to that of the CPF in Singapore.
“The Singapore CPF manages up to 37% of the salary, divided between employee and employer contributions. Up to 23% of the 37% can be used towards housing. The CPF itself is excellently managed, which allows the government to initiate major, centrally-planned housing for the Singaporean working class. This is eventually where we want to go, and allowing more funds in management for Pag-IBIG is a necessary first step,” Salceda explained.
“Workers deserve better housing. The problem is that the maximum mandator contribution for Pag-IBIG, the housing mutual fund, is just P600 in total per worker. This will simply not do, if we want to provide humane and dignified housing for the working class,” Salceda said.
Under the current version of HB 8938, employers will pay 4% of worker salary and the worker, 1% of their salary to the pension plan. Micro, small, and medium enterprises (MSMEs) will only pay 2% of worker salary, while very small businesses with under three workers will be exempt. Salceda wants the HDMF to be among the options to be fund manager to the pension contributions.
“I was an investment manager for much of my adult life, before I entered elected office. Pag-IBIG’s performance can compete neck-and-neck with the companies I worked for in the past. It’s that rare government agency that can compete with the private sector. I want to empower it,” Salceda said.