MANILA - The Trade Union Congress of the Philippines (TUCP) on Monday urged the Home Development Mutual Fund (Pag-IBIG Fund) against raising its mandatory contribution rates, saying this would unduly burden its 7.4 million member-workers.

"Offhand, the contemplated increase in contribution rates is uncalled-for. It should be studied extensively. There should be adequate public consultations on the matter," TUCP secretary-general Ernesto Herrera said in a statement.

To build up its financial capability to meet the growing demand for housing loans, Herrera cited the need for Pag-IBIG, headed by Vice President Noli de Castro, to forcefully expand membership and cover more workers.

"This is definitely the superior alternative to ramming higher contribution rates," he said.

In a statement posted on the Pag-IBIG website on September 18, chief executive officer Jaime Fabiaña announced that the fund would increase contribution rates.

"Increasing our contribution rates will allow members to borrow bigger loan amounts and support the higher loan packages under Pag-IBIG’s housing finance program, while still ensuring the long-term stability of the fund," Fabiaña said.

Herrera said that while Pag-IBIG membership is mandatory, only one out of every four workers is actually covered by the fund.

The Social Security System (SSS) now has 27.8 million member-workers in the private sector, while the Government Service Insurance System (GSIS) has another 1.4 million member-employees in the public sector.

"Thus, Pag-IBIG has 29.2 million potential member-workers. Yet, the fund has managed to effectively cover only 25 percent or 7.4 million of them," he said.

He said Pag-IBIG could easily increase contribution collections and augment its financial resources four times by simply covering all SSS and GSIS members.

Pag-IBIG provides P160-million worth of loans every day that enable almost 300 members to borrow an average of P533,000 each to acquire new homes.

At present, Pag-IBIG members contribute only two percent of their monthly earnings, with the salary ceiling at P5,000. Thus, most members contribute only P100 monthly, whether they are earning P5,000 or P50,000 every month.