How To Start Saving And Earning With Pag-IBIG MP2

How To Start Saving And Earning With Pag-IBIG MP2

Are you looking for a passive income opportunity that isn’t complicated to do? Investing is probably the most underrated form of passive income in the Philippines, which the masses have been overlooking all these years. Filipinos have been cautious about saving all these years, but we all know that isn’t enough if you want it to stand the test of time (inflation).

The government has finally broken the barrier that’s keeping the general public from participating in the country’s economic gains through investment. And this is through  Pag-IBIG’s MP2 program or the modified Pag-IBIG savings program. 

While it is a form of a savings program, your money doesn’t stay stagnant but is rather invested in the country’s investment market. 

So what is Pag-IBIG MP2

Unlike the regular Pag-IBIG program that every employed and self-employed Filipinos are part of, the MP2 is a voluntary program that provides a higher earning potential than a regular savings account. Your savings is invested by Pag-IBIG and will earn through dividends, just like investing in mutual funds. 

Since its launch, MP2 has been earning higher interest than regular savings accounts, and tax-free dividends at that. In 2019, Pag-IBIG MP2 dividend rate was 7.23%, and historically, it’s been increasing year-on-year. Its highest rate so far was in 2017 with 8.11% interest rate.

The dividend rates are announced every March of the year, and the announcement is published on the Pag-IBIG’s website. 

YEARMP2 DIVIDEND RATE
20197.23%
20187.41%
20178.11%
20167.43%
20155.33%
20144.68%
20134.59%
20124.67%
20114.63%
20105.5%

Is Pag-IBIG MP2 the same as the Pag-IBIG savings fund?

A regular savings from Pag-IBIG is different from the MP2. The former does not promise any returns at all and is solely for the purpose of determining your home loan amount in the long run and is given back to you in a form of a regular loan with interest. 

Pag-IBIG MP2 is more of a short to middle-term investment, allowing you to have access to your funds in as early as 5 years’ maturity whereas the regular Pag-IBIG is locked in for at least 10 years. 

How does Pag-IBIG MP2 earn?

In case you didn’t know, Pag-IBIG is a mutual fund and your contributions are used to invest in assets and generate profit through home loan financing. By law, 70% of Pag-IBIG funds are allocated to housing loans. 

So the question isn’t really how it is earning, but rather why it’s earning higher than the regular savings account. Apparently, the Pag-IBIG Fund has been showing strong financial performance over the years, thus pushing the MP2 rates up. Its strong performance has been attributed to the agency’s operational efficiency and its strong housing loan payment collection.

How much can Pag-IBIG MP2 potentially earn? 

As mentioned initially, your MP2 account will earn through dividends, and the amount of money you’ll get in return will depend on the amount of money you’ve saved in MP2 and the length of your investment.

Pag-IBIG MP2 is a long term investment; its gains will be ultimately beneficial only if you’ve managed to ride the tides of the investment market long enough and accumulate enough gains to counter the losses of the investment market.

Below is an example of a rough computation of how much your MP2 savings would have grown if you made a one time investment of ₱100,000 since 2015.

YearValue of savings (year-on-year)
2016₱105,330
2017₱113,156
2018₱112,332
2019₱131,397
2029₱140,987

Pag-IBIG MP2 Application

Applying for MP2 is a different process from your regular Pag-IBIG loan, and you can either do it online or over-the-counter, and you simply need to fill out a form. 

Who can apply for MP2?

Unlike Pag-IBIG’s loan program, anyone can apply for MP2 as long as you’re an existing member of Pag-IBIG, it doesn’t matter whether or not you’re actively paying your premium.

What are the requirements for MP2?

There are only 3 requirements to apply for the Pag-IBIG MP2:

  1. A fully completed MP2 form
  2. A valid ID
  3. Passbook or ATM card of your bank account for the MP2 

How to apply for Pag-IBIG MP2?

The application process is straightforward, while the initial process can be done online, you will still be required to proceed to the nearest Pag-IBIG branch to complete the process. 

Over-the-counter application

Go to the nearest Pag-IBIG branch in your area and submit your duly accomplished MP2 Savings Application form together with a valid ID and your dedicated bank account’s ATM card or passbook. 

Online application

  1. Go to the Pag-IBIG MP2’s online registration page
  2. Fill in the required information
  3. Take note of your MP2 account number on the upper right corner after you’ve filled up the online registration form 
  4. Proceed to the nearest Pag-IBIG branch with your MP2 account number

When can you get your dividends?

Upon your visit to the Pag-IBIG branch, you can discuss with the Pag-IBIG officer handling your application how frequent you wish to receive your dividends. 

Your funds are locked in for a minimum period of 5 years, but you can claim your dividends annually if you desire to. Simply inform Pag-IBIG to arrange an annual payment of your dividends. 

How much can you invest in MP2?

If you choose to invest monthly, the minimum amount you can allot is ₱500 a month. However, if you’re capable of doing a one-time  investment, while they don’t really have a specific amount for the minimum other than ₱500, you should allocate at least ₱30,000 to obtain a good enough return from your dividends annually. 

Where to pay for your MP2 contribution?

There are various ways for you to pay for your MP2:

  • Salary deduction just like your monthly premium 
  • Over-the-counter at any Pag-IBIG branches 
  • Over-the-counter at any participating payment centers such as:
    • 7-11
    • Bayad Centers
    • SM Business Centers
    • M. Lhuillier
    • ECPay
  • OFWs can pay through  international partners such as
    • iRemit
    • PayPilipinas
    • Philippine National Bank (PNB) 
    • Asia United Bank (AUB)

What happens after the 5 years lock-in period?

Once the lock-in period is over, your savings will be reverted to a regular Pag-IBIG savings account. Your funds will then earn only as much as a regular savings account, and it will stop earning interest after 2 years if no withdrawals have been made. 

Why should you invest in Pag-IBIG MP2?

Pag-IBIG MP2 isn’t your typical mutual fund type of investment – it’s as lucrative but minus the usual fees! If anything it’s mostly a win for most MP2 savers, here’s why. 

  • All your earning won’t be subjected to any taxes 
  • All Pag-IBIG members can easily apply for this, even those who are no longer working or employed 
  • No fees, you’ll pocket every cent of your dividends
  • Historically, the dividends are earning annually, with no records of loss 
  • It’s backed by the government, so you’re guaranteed that your funds are safe. It’s perfect for investors with low risk appetite 
  • You only need ₱500 to start saving 
  • You are not tied to a contract or obligated to regularly pay a premium, just an initial deposit of ₱500. You can add money anytime you want.
  • Paying can be done through payment centers
  • Your dividends are automatically transferred to your dedicated bank account on your chosen schedule (annually or after 5 years). 

Realistically speaking, it doesn’t have much of a downside other than the fact that it’s lock-in period is 5 years. But even that has a workaround, where you can have your dividends be released within the lock-in period, though, not in full. 

Can Pag-IBIG MP2 be a good source of passive income? Definitely! There’s really nothing to lose if you invest some money here, it’s also a good and safe investment option if you simply want to diversify. It’s less restrictive than other investments aside from its 5-year lock-in period, and its returns are promising. 

If you want to have a passive income but don’t know where to start, this investment channel is the perfect place to start your investment journey.

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