Last Updated on: September 20, 2023
TL;DR – PAG-IBIG MP2 is a voluntary, government-backed, and tax-free investment opportunity for Filipinos. You can earn through dividends and start investing for as low as P500.
Its current dividend rate is 7.03% (released in March 2023), up by more than a percent compared to its 2021 rate.
There are a lot of investment instruments that are available for every Filipino. There are the usual kinds, like the stock market and bonds, mutual funds and UITFs, REITs and real estate, FOREX, VULs, high-interest savings, and many more.
But one investment offers the advantage of being government-backed and tax-free upon withdrawal.
The investment I want to highlight today is the Modified PAG-IBIG Savings II, also known as PAG-IBIG MP2 or PAGIBIG MP2 or PAG IBIG MP2 Savings or any other versions.
Through its innate qualities, It has become one of the best media for long-term investments in the Philippines.
Let us learn more about the PAG IBIG MP2 requirements and how to invest in it.
Table of Contents
What is PAG-IBIG MP2?
Modified PAG-IBIG Savings II, or MP2, is the agency’s voluntary savings program for active PAG IBIG members.
This financial instrument is designed to supplement the regular PAG-IBIG savings, which are deducted every month from your paychecks if employed.
Similar to mandatory savings through monthly contributions, it also earns dividends.
However, MP2 earns 0.5% higher than the regular PAG-IBIG Savings fund dividend earnings.
For instance, the PAG-IBIG MP2 dividend rate for 2022 (released in 2023) is 7.03%, while the regular PAG-IBIG savings will receive 6.53%.
What Is the Historical Dividend Performance of PAG-IBIG MP2?
Here is the past performance of PAG-IBIG MP2:
| Year | MP2 Dividend Rate | Regular Savings Dividend Rate |
|---|---|---|
| 2022 | 7.03% | 6.53% |
| 2021 | 6.00% | 5.50% |
| 2020 | 6.12% | 5.62% |
| 2019 | 7.23% | 6.73% |
| 2018 | 7.41% | 6.91% |
| 2017 | 8.11% | 7.61% |
| 2016 | 7.43% | 6.93% |
| 2015 | 5.34% | 4.84% |
| 2014 | 4.69% | 4.19% |
| 2013 | 4.58% | 4.08% |
| 2012 | 4.67% | 4.17% |
| 2011 | 4.63% | 4.13% |
Please note that these percentages are not guaranteed and can only be used as a guide in your decision-making.
From 2011, the dividend rate has continuously increased until it reached the 8.11% peak dividend rate. It has declined in the past four years until it crawled back to 7.03% in 2023.
How Will You Earn Through PAG-IBIG MP2?
According to the PAG-IBIG Fund page, 70% of the annual net income of the fund is distributed proportionally to its members. So, as long as people take out PAG-IBIG loans and contribute to MP2, the investment product will continue to provide above-average returns.
If you look at the historical dividend earnings of the fund, you’ll notice that it offers a much higher earning potential than just leaving your money in the bank.
Historically, the dividend yields of the fund averaged 6.16% in the last ten years and 6.97% in the previous five, which are way higher than the less-than-1% interest offered by traditional banks.
The fund earned its highest dividend yield in 10 years in 2017, with 8.11%, and has not paid a dividend yield lower than 5% since 2014 (8 years ago).
Though the yields may be historically high, remember that the dividend yields presented are only based on historical data and, as always, do not guarantee the same dividend rates in the future, so be careful when investing.
Advantages of PAG-IBIG MP2
There are several advantages MP2 has to offer compared to other investment products. Here are some.
1. Government-guaranteed
PAG-IBIG MP2 is government-guaranteed, meaning that the financial instrument is almost secured and will be honored by the financial institution, in this case, the Philippine government.
2. Tax-free dividends
Unlike stock dividends with a 10% withholding tax, MP2 dividends are tax-free. This will ensure that you gain a relatively higher amount from your dividend earnings.
3. Low starting capital
Another advantage of investing in MP2 is it’s relatively cheaper than other investment alternatives. You can start investing for as low as P500.
4. Higher Dividend Rate than PAG IBIG Regular Savings
The MP2 fund has a 0.5% higher dividend rate than the PAG-IBIG regular savings. In the past five years, the dividends have hovered around 7%.
5. Low risk
Investing in MP2 is almost risk-free because the government offers it. This fund will theoretically only fail if the country or the agency fails. Just a reminder that while MP2 is low-risk, the rate of dividends will change from year to year.
Who Can Invest in PAG-IBIG MP2?
The first requirement for anyone who wants to invest is to be an
- Active PAG IBIG Fund Member. This means that you should have a PAG-IBIG Member ID (MID) and have contributed at least once in the last six months.
- It is also open to former members. Including retirees and pensioners with other sources of income, regardless of age, with at least 24 monthly savings before retirement.
- Natural-born Filipinos are also welcome to save in MP2, provided they have saved for at least 24 months before migrating to another country.
- OFWs with PAG-IBIG MID can also invest through MP2.
How To Invest in PAG-IBIG MP2
The convenient way to apply for a PAG-IBIG MP2 Savings account is through the Virtual PAG IBIG Website or by submitting an accomplished MP2 Enrollment Form to any PAG-IBIG branch.
You can start saving once your MP2 Savings Account Number is issued. You can also create as many accounts as you can. Doing this can allow you to allocate the purpose of your savings like a goal jar.
How Much Do I Need To Start?
The minimum MP2 savings is P500 per remittance. Still, you’ll have the option of a one-time (lump sum) remittance with a 5-year maturity, or you may opt for the monthly remittance.
You can then re-apply your MP2 savings account after the 5-year maturity period. This way, you will continuously grow your money through compounding.
There is also no limit on how much you’ll save, but you must diversify your portfolio.
Where Can I Pay or Top Up My MP2 Account?
There are several ways how to top up your MP2 Account. There is a salary deduction for employees, online channels like GCash and Maya, and over-the-counter remittances.
To view your savings, you can check them online through the Virtual Pag-ibig Portal.
How Can I Claim My Investments?
After the maturity period of your savings, you can opt to credit your investment in your enrolled savings or checking account or PAG-IBIG accredited banks.
To claim MP2 Savings with a 5-year maturity, click here.
To claim MP2 Savings over the counter, click here.
What Are the Risks of PAG-IBIG MP2?
Investing in PAG-IBIG MP2 is virtually risk-free because the Philippine Government is our guarantor. You can be sure that you will get your money back after the maturity of your MP2.
So, the only time PAG-IBIG will not return your investment is if the Philippines have a liquidity crisis.
However, there are also downsides to MP2, like the following:
Lock-in Period
If you selected the 5-year maturity period, your money is locked for the next five years. This means you can’t withdraw your money during that time.
Dividends Are Not Guaranteed To Remain High.
As you’ll notice from the previous dividend performance, the dividend rates are inconsistent, unlike high-interest digital banks. This means that your dividend can be higher or lower than the last year.
There Is a Possibility That They Don’t Give Dividends.
Though MP2 is generally risk-free regarding your capital, the dividends are not because its payout will depend on the agency’s earnings.
Non-payment of dividends is less likely to be an issue since more and more Filipinos are loaning their homes through PAG-IBIG.
Verdict: Is MP2 a Good Investment?
Like every investment product, PAG-IBIG MP2 can be a good investment vehicle if aligned with your life goals. It also contains various advantages and security that are tied to the government.
Another thing is because every regular Filipino employee is paying a PAG-IBIG contribution, access to MP2 is easy as it removes the barrier to entry.
To answer the question if MP2 is a good investment, the simple answer is yes, as long as it aligns with your financial goal.
Final Thought
As I’ve already shared in my previous posts, past performance does not guarantee future results. The investment product we’ve discussed is only a means to an end.
So, remember to attach your investments to specific goals and not just for the sake of investing.
Happy investing!
PS: This post is a collaboration with my girlfriend. ;D
