13thCONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
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First Regular Session 
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Introduced by Senator Recto 
EXPLANATORY NOTE 
In pursuit of the Constitutional mandate to promote public welfare through the 
delivery of ample social services, particularly responding to the need for decent shelter, 
a system of mandatory employee-employer contributions for housing purposes was 
established through Presidential Decree 1752 otherwise known as the “Home 
Development Mutual Fund (HDMF) Law of 1980.” During the term of President 
Aquino, the fund contributions to the HDMF were temporarily suspended for the 
purpose of studying how the burden of the lower income earners can be reduced and 
their benefits increased. 
After consultation with concerned sectors and by virtue of 
Executive Order No. 35, the operation of the Fund was continued. In 1994, P.D. 1752 
was amended by Republic Act 7742, allowing the Fund to invest not less than seventy 
percent (70 %) of its investible fund to housing. 
The Fund‘s primary purpose is to grant a Housing Plan which will provide 
financial assistance to qualified employees by extending loans for the acquisition of a 
house/lot, construction or improvement of a house. The Fund also offers a Provident 
Plan that includes retirement, membership maturity, death, disability/insanity, 
permanent departure, separation due to health benefits and Additional Death Benefit. 
It is apparent that the Provident Benefits offered by the Fund are also being 
granted by the Government Service Insurance System (GSIS) and the Social Security 
System (SSS) through their Employees Compensation Program. 
Statistics reveal that as of September 2003, there are 5,305,000 members of HDMF 
whose total contributions reached P 8.169 Billion to its Fund. However, the amount 
paid for total benefits during the same period, including Provident and Additional 
Death Benefits was only P 2.881 Billion or 35 % of the total membership contributions. 
Only 105,004 members or a measly 1.98% of its total membership availed of the said 
benefits. 
The low turn out of members availing of provident benefits from the HDMF may 
be due to the duplication of benefits being granted by the Fund and the GSIS and SSS. 
Further, it may also be an indication that more members may want to contribute a 
portion of their hard-earned salaries to other forms of investments, which are of equal 
or even greater need to them than those estabIished in the Fund‘s Provident Plan. 
Notwithstanding the importance of providing a roof over our heads, this 
measure motivates employees to voluntarily plan and provide for their future needs 
through investments of their own choice, while maintaining the corresponding 
employer’s contribution. 
Employees are thereby not bound by mandatory 


contributions to a Provident Fund that is in a greater part dedicated to housing 
purposes. 
This bill which allows employees to avail of Pre-Need Plans as an option to 
Home Development Mutual Fund (HDMF) membership, recognizes the employees’ 
right to individual responsibility for their salaries by giving them the free choice to avail 
of investments which provide for the performance of future service/s at the time of 
actual need. 
In view of the foregoing, immediate approv 
MRCjSB17.56-Pre-Need Plans Optiondoc 
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13th CONGRESS OF THE REPUBLIC . 
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OF THE PHILIPPINES 
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First Regular Session 
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S. BILL NO. 
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Introduced by Senator Recto 
AN ACT 
ALLOWING EMPLOYEES TO AVAIL OF PRE-NEED PLANS AS AN OPTION TO 
HOME DEVELOPMENT MUTUAL FUND (HDMF) MEMBERSHIP 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
SECTION 1. Title. - This Act shall be known as the "Pre-Need Plans Option Act 
of 2004" 
SEC. 2. Declaration ofpolicy. - It is hereby declared a policy of the State to 
motivate the employed and other earning groups to better plan and provide for their 
future needs in a voluntary manner with contributory support of their employers in 
pursuit of social justice and equity. 
SEC. 3. Definition ofTerrns. Whenever used in this Act, the following terms shall 
have their respective meanings: 
a,) "Pre-Need Plans" shall refer to contracts which provide for the performance 
of future service/services or payment of future monetary consideration at the 
time of actual need, payable either in cash or installment by planholders at 
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prices stated in the contract, with or without interest or insurance coverage 
and includes but not limited to life, pension, education, travel, interment, 
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cremation and other similar contracts and investments; and 
b.) "Pre-Need Company" is any corporation registered with the Securities and 
Exchange Commission (SEC) and authorized/licensed to sell or offer for sale 
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pre-need plans. A Pre-Need Company may be a single plan (selling one type 


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of Pre-Need Plan) or multi-plan (selling more than one (1) type of Pre-Need 
Plan). 
SEC. 4. Amendment to Section 4 of R.A. 7742. - Section 4 of Republic Act 
Numbered Seven Thousand Seven Hundred Forty-Two is hereby amended to read as 
follows: 
”SEC. 4. Fund Coverage. - Coverage of the Fund shall be VOLUNTARY 
[mandatory] upon all employees covered by the Social Security System and the 
Government Service Insurance System, and their respective employers: [Provided, 
however, That coverage of the employees whose Monthly Compensation is less 
than Four thousand pesos (P 4,000.00) shall be voluntary:] Provided, [further,] That 
upon membership with the Fund, their employers shall contribute an amount in 
accordance with Section 5 of this Act. 
“Such coverage may be extended to other working groups, with or 
without employer contributions, as may be determined by the Board of 
Trustees.” 
SEC. 5. Coverage. - All employees covered by the Social Security System (SSS) 
and the Government Service Insurance System (GSIS) and other earning groups shall be 
allowed to avail of pre-need plans as an option to HDMF Contributions: Provided, That 
the cost to be borne by the employer shall not exceed P 100.00: Provided, juther, That 
any amount in excess of the employer’s share of P100.00 shall be shouldered by the 
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employee. 
from his/her salary said amount. 
He/she may sign an Authorization allowing his/her employer to deduct 
SEC. 6. 
Duration of Contribution. Employees who resign, are laid-off or 
suspended from employment may wish to continue their Contract with the Pre-Need 
Company: Provided, however, That, the employer’s counterpart contribution of Pl00 per 
month shall now be shouldered by the employee. 
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SEC. 7. Accountability for Delinquent Accounts. The employer or office shall not be 
held accountable for any delinquent account maintained by the employee with the Pre- 
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Need Company as a result of the employee's negligent payment of his/her 
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contributions. 
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SEC. 8. Implementing Rules'and Regulations. - Within sixty (60) days from the 
approval of this Act, the Civil Service Commission (CSC) in cooperation with the 
Department of Budget and Management (DBM) shall promulgate the rules and 
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regulations necessary for the effective implementation of this Act. 
SEC. 9. Separability Clause. - If any provision or section of this Act or the 
application thereof to any person or circumstance is held to be invalid, the other 
provisions or sections of this Act, and the application of such provision or section to 
other persons or circumstances, shall not be affected thereby. 
SEC. 10. Repealing Clause. - All laws, executive orders, rules or regulations, or any 
part thereof, inconsistent with any provision of this Act are hereby repealed or modified 
accordingly. 
SEC. 11. Efjectivity. - This Act shall take effect fifteen (15) days after its 
publication in the Oficial Gazette or in at least two (2) national newspapers of general 
circulation, whichever comes first. 
Approved, 
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