Even during these challenging times, there are still plenty of excellent ways for us Filipinos, whether you’re in the Philippines or working overseas, to grow your savings. One convenient way to do so is through investing regularly in the Pag-IBIG MP2 Savings Program. It is a program by the Home Development Mutual Fund (HDMF), more popularly known in the Philippines as Pag-IBIG.
What is the Modified Pag-IBIG II (MP2) Savings Program?
The MP2 Savings is a special savings facility with a 5-year maturity, designed for Pag-IBIG Fund members who wish to save more and earn even higher dividends, in addition to their Pag-IBIG Regular Savings. The program is also open to pensioners and retirees who were former Pag-IBIG Fund members.
What are the benefits of investing in Pag-IBIG MP2?
1. Government-guaranteed and tax-free earnings.
The program is fully guaranteed by the Philippine Government so you can have peace of mind and eliminate the risk of losing your savings. Aside from that, all your earnings are tax-free thus making this savings facility ideal for conservative investors who want to have a safe place to invest and without capital loss.
2. There are no fees and charges.
Your invested amount remains intact unlike mutual funds where there are sales load and other fees.
3. Eligible members also include those who are no longer actively employed but still has an income.
4. Dividend rates are over 7% which are historically higher than a savings account, time deposit, and the mandatory savings.
One of the most attractive benefits to having an MP2 savings account is its steady track record of dividend rates averaging at 7.65% from 2016 to 2018, and 7.41% on 2019. This makes it more profitable than the regular Pag-IBIG savings program (P1) and makes its dividends higher than the average interest rates of most investment products from local commercial banks.
5. Dividends can be released to your bank or remain in the account to earn compounded growth.
You may request to have your dividends released on your bank or opt to remain on your account to increase your earnings.
6. Affordable and flexible.
The small capital requirement means that you can start even when you don’t have that much money. You can save as little as P500 monthly and increase your monthly savings as your lifestyle and budget permit. Alternatively, you can also deposit a lump sum of, for example, P30,000 instead of paying P500 every month for the next 5 years. There is no limit on how much you put up. This is perfect for those who have more to invest.
Moreover, contributions are flexible. Considering it is voluntary savings, you can invest however you want: monthly, quarterly, or annually. Unlike variable universal life (VUL) policy, you are not required to pay a periodic premium.
In addition, you can enroll as many MP2 accounts under your name for varying financial goals. For example, one can be for your child’s education, the other for a small-business fund, and so on.
“The real measure of your wealth is how much you’d be worth if you lost all your money.”
7. Easy account opening.
Account opening is easy, you just need to update contributions on your existing Regular Savings (P1) membership.
8. Convenient payment methods.
Payment is also very convenient. Contributions are accepted at any branch or participating payment centers, and now, Pag-ibig has an online payment facility in which you can use your MasterCard or Visa Card to pay.
9. You can withdraw any time.
Whenever you need emergency funds, you may request to withdraw your funds, but of course, terms and conditions will apply.
10. Ideal savings vehicle from short-term to medium-term financial goals.
You can access your funds more quickly with the MP2’s five year maturity period, unlike most investment programs that last between 10 to 20 years. After that 5 year-period, you can either withdraw your savings or let it keep earning with compounded interest for another cycle.
11. It can be a good way to diversify your portfolio and as a way to manage risks in your investments.
12. Now, you can open an online Virtual Account on the Pag-IBIG website!!
Thus, the MP2 Savings Program is perfect for OFWs!
What are the disadvantages of investing in Pag-IBIG MP2?
- Payment transactions may be inconvenient for those without any Pag-ibig branches nearby or those without internet connections to access online facilities.
- Lock-in period is set at 5 years.
- No rollovers are available. After 5 years, your contributions would earn the same returns as the mandatory savings. Two years later, it would not earn anything.
- If you wish to continue getting the benefits beyond five years, opening a new account is required.
- There is an opportunity cost when the earnings from MP2 are lower than other investment opportunities such as the mutual funds which has reported higher returns.
- When account is closed before five years, those who opted to receive the dividends at the end of 5 years will only be entitled to get 50% of the dividend. Meanwhile, those who opted to receive dividends each year will only be able to get back their capital.
Am I eligible to open a Pag-IBIG MP2 Account?
You are eligible to open a Pag-IBIG MP2 account if you belong to any of these groups:
- An active Pag-IBIG member
- Pensioner with at least 24 monthly contributions to HDMF.
How to open a Pag-IBIG MP2 Account?
Through Walk-in
- Go to your nearest Pag-IBIG branch.
- Fill in and submit the Modified Pag-IBIG II Enrollment form.
- Receive your issued MP2 account number from the Pag-IBIG officer. You will be asked for this information every time you remit your savings.
Via Online enrollment
While the MP2 online registration is quicker than filling in the enrollment form manually in the Pag-IBIG office, take note that you will still need to complete your MP2 enrollment in your nearest Pag-IBIG branch.
- Go to the Modified Pag-IBIG II Online Enrollment System and fill in your Pag-IBIG MID number, firstname, surname, and birthdate.
- Enter the captcha code shown on your screen and click Submit. You’ll be redirected to the online form.
- Fill out the information asked in the online form. Take note that your Monthly Oncome and Desired Monthly Contribution are required fields.
- Read the Terms and Conditions, enter the captcha code, and click the Submit My Application button.
- In the confirmation page, take note of your MP2 account number on the upper right corner. You’ll also find your accomplished enrollment form here.
- Read the Terms and Conditions. Write your name in print and sign with the current date at the bottom of the page.
- Click the link at the bottom most part of the page to print or save your form as PDF. If you are employed, be sure to print a second copy for your company HR so you can automate your MP2 savings in the form of salary deduction.
- Head to your nearest Pag-IBIG branch and submit a printed copy of your MP2 form.
”There is no lower, middle, or upper class. There is the investor class and the people who have to work for a living.”
How much funds should I save?
You can start for as low as Php 500, but it’s really up to you. If you want to put up more, you can save up to Php 1,000 to Php 5,000 or even more!
How frequent should I save?
It’s up to you how frequently you would pay your contributions, since the program accepts monthly, quarterly or yearly payments. Either way, you will be eligible to receive the yearly dividends.
How can I withdraw my dividends?
There are two ways to withdraw your dividends, either by compounded or annually. In compounded, you will have to wait until the end of the 5-year lock-in period to get your dividend. While in annually, you will get your yearly dividends straight to your settlement account.
How can I pay my contributions?
Contributions can be deducted from your salary subject to your arrangement with employer. They may be accepted at any Pag-ibig branches or any of the participating payment centers: 7-11 stores, Bayad Centers, SM Business Centers, M. Lhuillier, and ECPay.
While for OFWs, like us or people who are residing abroad, you may remit through international partners such as iRemit, via PayPilipinas, Philippine National Bank (PNB) and Asia United Bank (AUB). And also, pay via online through PayMaya.
Can I open more than one MP2 savings account?
Yes, since multiple accounts are permitted, it might be an option for you if you’re saving for different financial goals, and you don’t want to mix up your funds for each of them, such as separating your future children’s educational fund, small business capital, or even your retirement funds.
How can I withdraw my full savings?
You may withdraw your money at the end of the lock-in period, which is 5 years. Certain unforeseen situations such as total disability, medical-related work separation, unemployment due to business closure or retrenchment, retirement, serious illnesses, migration abroad, unexpected demise, etc may allow you to withdraw funds while terms and conditions apply.
However, if you close the account before the period on grounds not mentioned above, there are certain consequences. For compounded accounts, you’re only entitled to 50% of the dividends and those in annual accounts will only get their total savings minus all dividends.
What will happen if I don’t withdraw the funds after the 5-year lock-in period?
If you chose to keep your savings beyond the lock-in period, the funds will no longer earn the same dividend as before, instead it will gain the same earnings as the Mandatory Regular (P1) Savings. After two years, if no withdrawal has been done, the funds will not gain earnings anymore.
Hence, if you wish to continue enjoying the benefits, you can opt to open a new MP2 account again.
“Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.” – Dave Ramsey
Author’s Views
As I am writing this blog, I have just opened my Virtual Account with Pag-IBIG and started my first contributions with MP2 Savings Facility. I am hoping to use this in the future for my family or if ever we want to build our own dream house or to use as a retirement fund. As an OFW, it is very important to think and plan about the future and use our earnings wisely. I know and I believe that saving with Pag-IBIG MP2 will be a good way to reach financial freedom.
How about you? Do you have an active Pag-IBIG MP2 Savings Account?
We would love to hear from you! Let us know your views and experience with this savings facility.
“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”
Resources:
1. Pag-ibig Fund MP2 Savings Program
2. Bangko Sentral ng Pilipinas. Annual – BSP
3. Philippine Embassy. FAQs: Pag-IBIG FUND MP2 (MODIFIED Pag-IBIG 2) SAVINGS PROGRAM
4. Department of Foreign Affairs. Pag-ibig Fund Programs
5. Guide on Pag-ibig Facilities
How To Access Your Virtual Pag-IBIG Account – OFW Guide
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This is very informative! I think the benefits are good enough to invest in this program.
This is such a great opportunity for OFW’s. A lot of us need to educate ourselves with investments.
Wow this sounds like a great way to invest. I mean tax free and no fees or charge, that’s great
great way to invest, you opned my eyes on a lot of this on this investment post it’s very informative. thank you
The benefits are looking really reasonable and I guess everyone should learn about this
These are great tips for people to have a new way to save money – thank you!
Oh this does sound like a great savings program! Going to look into it more.
This is so worth to invest on it. Thank you for all the details about this program. I will check more about it.
I like that you can withdraw any time. That is not always the case with different investment opportunities. My oldest (grown) son has been teaching me some things about finances/investing and I’m glad (it’s how he makes his living).
I love how detailed and informative this post is. Thanks for the share and will think on this more before I make a move.
I can see this is a truly good saving program in your country. So bad I don’t have it here. I will join if they do a similar one in my country.