- Rates of contribution
We cannot help but compare Pag-Ibig’s rates of employee-employer contributions with those of the Employees Provident Fund (EPF) of Malaysia and of the Central Provident Fund (CPF) of Singapore. This is best captured by the table of rates of contribution below:
Total employer-employee contribution rates for a person age 35
YEAR CPF EPF HDMF YEAR CPF EPF HDMF
1967 10.0% 10.0% 1991 40.0% 20.0% 4.0%
1968 13.0% 10.0% 1992 40.0% 20.0% 4.0%
1969 13.0% 10.0% 1993 40.0% 22.0% 4.0%
1970 16.0% 10.0% 1994 40.0% 22.0% 4.0%
1971 20.0% 10.0% 1995 40.0% 22.0% 4.0%
1972 24.0% 10.0% 1996 40.0% 23.0% 4.0%
1973 26.0% 10.0% 1997 40.0% 23.0% 4.0%
1974 30.0% 10.0% 1998 40.0% 23.0% 4.0%
1975 30.0% 13.0% 1999 30.0% 23.0% 4.0%
1976 30.0% 13.0% 2000 32.0% 23.0% 4.0%
1977 31.0% 13.0% 2001 36.0% 21.0% 4.0%
1978 33.0% 13.0% 6.0% 2002 36.0% 23.0% 4.0%
1979 37.0% 13.0% 6.0% 2003 33.0% 21.0% 4.0%
1980 39.0% 13.0% 6.0% 2004 33.0% 23.0% 4.0%
1981 42.5% 20.0% 6.0% 2005 33.0% 23.0% 4.0%
1982 45.0% 20.0% 6.0% 2006 33.0% 23.0% 4.0%
1983 46.0% 20.0% 6.0% 2007 34.5% 23.0% 4.0%
1984 50.0% 20.0% 6.0% 2008 34.5% 23.0% 4.0%
1985 50.0% 20.0% 6.0% 2009 34.5% 20.0% 4.0%
1986 35.0% 20.0% 4.0% 2010 35.0% 20.0% 4.0%
1987 35.0% 20.0% 4.0% 2011 35.5% 23.0% 4.0%
1988 36.0% 20.0% 4.0% 2012 36.0% 23.0-24.0% 4.0%
1989 38.0% 20.0% 4.0% 2013 36.0% 23.0-24.0% 4.0%
1990 39.5% 20.0% 4.0% 2014 36.0% 23.0-24.0% 4.0%
Notes:
- The Philippines has a separate SSS and GSIS, and PhilHealth, with a combined employer-employee contribution of 13.7 percent, based on present SSS and PhilHealth rates.
- The contribution into the CPF of Singapore is broken down into 2/3 for savings and the remaining 1/3 for social security and medicare.
While the Philippines started with a rate of 3 percent of salary for both the employee and the employer, it finally settled for just 2 percent. Perhaps, this was a compromise considering the opposition of the labor and the employer sectors, and failure of government to see through a savings scheme that was supposed to be a keystone of economic development to contribute heavily to inclusive growth.
Singapore and Malaysia, on the other hand, have been reviewing and adjusting their rates, calibrating in accordance with the economic environment of the times.
- The P5,000 limit in reckoning contributions
The P5,000 limit in reckoning the contributions of employees and employers is most telling and most unjust. While there have been changes in wage levels, grudgingly perhaps because of inflation, the P5,000 limit has become static.
The obligation to save should be made universal and shared by all income strata, both rich and poor. In fact, the poor should even be entitled to exemption, but certainly the rich have greater capacity and even greater obligation to save, and yet, contributions to the fund are made relative to their incomes up to P5,000 only.
It is our position that the higher income sector that has the greater capacity must have the bigger obligation to save as part of an economic strategy. Florencio B. Orendain and Marilou O. Adea