Even in these difficult circumstances, there are still many options for Filipinos to build their savings, whether they live in the Philippines or abroad.
There are various programs you can join to save money. The most common way to save is to deposit your money in banks. Your money will then earn interest as time passes by. But everyone knows that you can’t earn much with bank interest.
The average annual interest rate in banks in the Philippines is 0.10%. So if you deposit 100,000 pesos in the bank, you will earn only 100 pesos a year.
What if the government has a program for you to save money and it has a bigger interest? Would you rather save your money here? If you want to know, just keep reading this article to know what the Pag-IBIG MP2 Savings Program is and how to enroll or apply for it.
Table of Contents
- What is Pag-IBIG MP2 Savings Program?
- Am I Eligible to Apply for Pag-IBIG MP2 Savings Program?
- What are the Benefits of Pag-IBIG MP2 Savings Program?
- How to Open a Pag-IBIG MP2 Savings Account?
- Pag-IBIG MP2 Maturity
- Frequently Asked Questions
- Final Thoughts
What is Pag-IBIG MP2 Savings Program?
Members who desire to save more and receive larger dividends on top of their usual Pag-IBIG contributions can opt for the Modified Pag-IBIG 2 (MP2).
In other words, you must first have a regular Pag-IBIG savings account before enrolling in this program. But we’ll get to that later.
The HDMF spends the funds raised through the MP2 savings program primarily on its home loan program as well as its short-term lending programs, which makes it profitable. However, the fund expands as a result of borrowers’ interest payments. The rest is put into business bonds, term deposits, and government bonds.
To get started on this savings program, you don’t need to understand all of those technical and financial words. You only need to satisfy the prerequisites to join and to deposit money into your account on a regular basis for a set period of time, depending on how you want to earn from this program.
You may enhance your savings by at least 6% per year by investing in this program. That’s at least 100 times more than what traditional banks can give (at a maximum of 3 percent ). The good news is that it can go even higher. In actuality, the stated MP2 dividend rate in 2021 was 6%. Does this seem appealing to you? It only gets better. Continue reading the sections below to discover more.
Am I Eligible to Apply for Pag-IBIG MP2 Savings Program?
Only individuals having an active Pag-IBIG Fund membership or a source of monthly income, and/or Pensioners, regardless of age, with at least the equivalent of 24 monthly saves, are eligible to participate in the program.
That is, whether you are an active employee or a previous Pag-IBIG Fund member with at least 24 months of payments in the fund, you are eligible to participate in this program.
What are the Benefits of Pag-IBIG MP2 Savings Program?
There are many benefits to joining the Pag-IBIG MP2 savings program but here are 4 of its great benefits.
1. Higher Dividend Rate
The MP2 savings program’s above-market yearly payout rates are one of the most persuasive (if not the most compelling) reasons to save.
The average dividend rate for the last five years of the Pag-IBIG MP2 Savings Program is 6.97%. The interest rate of Philippine banks is insignificant compared to this. In addition, it is also tax-free and you can get the dividends in full.
There are inconsistencies with regard to the dividend rate of Pag-IBIG MP2 a couple of years ago. But whatever the outflow rate, one thing is certain. It is far more than what your typical savings account can provide. This is not to mean that you must invest all of your money in the program, while that is a plan you might pursue based on your financial objectives since it is fully voluntary and can supplement other investments you may have with your bank or other insurance companies.
2. Convenient and Flexible Savings Program
Another advantage of the MP2 program is that it just requires an initial investment of Php 500 and a monthly contribution of Php 500 if you choose to remit every month after that.
This makes contributing to the program extremely simple and easy, particularly for low-income individuals.
Furthermore, the MP2 allows you to choose how often you wish to save.
If you’re on a limited budget, you might select to save every month, for example. Alternatively, you can deposit larger money into your MP2 account in one go, eliminating the need to remit regularly for your convenience (and nowadays, safety as well).
Again, it all comes down to your financial capabilities and choices when it comes to saving money for your MP2. Go ahead and do whatever is most convenient for you! The main thing is that you’re aware of your possibilities.
You also have the choice of receiving your dividends as a yearly distribution or as compounding savings.
If you choose the yearly payment option, your profits will be deposited to your Pag-IBIG registered bank account every year. However, with compounded profits, you’ll have to wait until the conclusion of the five-year maturity term to get all of your dividends.
The compounded earnings will be significantly more than the yearly dividend, as you might expect. Furthermore, receiving the annual payout would be counter-productive to the program’s benefits because the dividend rates might go up for a minimum of 5 years, which is something you want to optimize. And if you have more money in your MP2 savings account, you’ll earn more money from the fund’s interest for the year. Consider this while deciding on your chosen source of income.
It’s ideal to set it for at least 5 years, then consider reinvesting it in the fund for another 5 years to receive significantly larger returns on your regular monthly savings of at least 500 pesos.
As previously stated, MP2 provides adequate possibilities. With a five-year maturity time, the MP2 program allows you to access your assets more rapidly than the ordinary Pag-IBIG savings program and other long-term investment vehicles (with maturity periods ranging from 10 to 20 years). This means the Pag-IBIG Fund will hold your MP2 savings for five years. After that time, you may either take your whole investment or continue to collect dividends for another two years.
Depending on the predicted need for your money, you can potentially get annual profits from your savings.
3. Guaranteed Tax-Free
If the greater returns aren’t enough to persuade you to join the program, you should know that, unlike other alternative investments, MP2 deposits are completely insured by the government, so there’s no chance of losing your money.
According to Pag-IBIG Fund President and CEO Acmad Rizaldy Moti, the worst-case scenario would be receiving only your principal (the real amount saved) with no return. So you may rest certain that your money is safe.
4. Unlimited Savings
Finally, you should be aware that the quantity of data you may save on the MP2 is unlimited. To maximize the profits you gain from the interest rates given by the program, you may start with the least amount of 500 pesos and increase as your capacity permits.
It’s also worth noting that there’s no penalty for not making a deposit. The 500 pesos minimum deposit is only applicable if you opt to send money within a specific month. So, when deciding how much you can save every month, you simply have three options: 0, 500 pesos, or any larger number.
You can, however, deposit as much as one million pesos.
You can also open and manage an unlimited number of MP2 savings accounts. This feature is great for meeting various financial goals. You could, for example, use one MP2 account to establish a small business and another to support your child’s college tuition. So, keep that in mind, especially if you have the resources.
How to Open a Pag-IBIG MP2 Savings Account?
There are two ways to open an MP2 savings account. One way is the traditional method which is visiting the nearest Pag-IBIG branches to your place and another way around is thru online enrollment.
Method 1: Walk-In Opening of MP2 Savings Account
Step 1: Go to your nearest Pag-IBIG branch and fill out the Modified Pag-IBIG II Enrollment Form.
Step 2: The officer will provide an account number to your MP2 account after encrypting your information. You’ll send your funds to this account.
Step 3: Because you’re already on-site, you may immediately pay your first monthly savings. Simply notify the officer, and you will be assigned a payment queue number.
Step 4: When your number is called, go to the cashier with your payment (the amount mentioned on your MP2 enrollment form) and get your official receipt once the transaction has been finalized.
Method 2: Online Opening of MP2 Savings Account
Step 1: Visit the official website of the Modified Pag-IBIG 2 Enrollment System.
Step 2: Supply your information as shown on the screen including your Pag-IBIG MID Number.
Step 3: Complete the online form on the next page. Be sure to fill in your Monthly Income and Desired Monthly Contributions (minimum of 500 pesos), since the system will require this information to process your account(s).
Step 4: After reading the terms and conditions at the bottom of the form, enter the code in the vacant area beside it.
Step 5: A new page will appear informing you that your MP2 enrollment was accomplished. Keep an eye out for the MP2 account number in the upper right corner. This is your account number, which you will need to access your account online or at any Pag-IBIG branch.
Step 6: Go over the terms and conditions. At the bottom of the page, write your name, the date, and your signature. When you’re finished, go to the bottom of the page and click the link to print your MP2 enrollment form. You may save it as a PDF file first and then print it later. If you’re an employee, you can print an extra copy to provide to your HR department or employer so that you can repay your MP2 savings through payroll deduction.
After you successfully printed your MP2 Enrollment Form, you need to submit it personally by visiting any Pag-IBIG branch at your place. Please bring valid IDs and you may as well pay your first monthly savings.
Pag-IBIG MP2 Maturity
You can withdraw your MP2 funds using one of two methods:
1) After the five-year maturity period
When your MP2 funds reach maturity, you can withdraw your profits in full. If you still wish to save through MP2, you must withdraw your funds and open a new account. If you do not take your money after the maturity term, it will continue to collect yearly dividends based on the rates for the regular Pag-IBIG savings program for another two years. Your funds will no longer produce dividends after this time period and should be collected promptly.
Under certain situations, an account holder may cancel and fully withdraw their MP2 funds prior to the five-year maturity period. Among these conditions are:
- Critical illness/Death of the member or an immediate family member
- Permanent departure from the Philippines
- Unemployment due to company closure or layoff
- Repatriation of an OFW member from his/her host country
- Retirement (except for pensioners)
- Total disability or insanity
- Separation from work due to health reasons
Frequently Asked Questions
The following are some commonly asked questions and answers concerning the Pag-IBIG Fund’s MP2 program.
What are the ways to pay my MP2 monthly savings?
You may pay your Pag-IBIG payments and MP2 savings in a variety of ways. You can use any of the following methods:
- Virtual Pag-IBIG
- Payment at the Pag-IBIG Branch
- Payment Centers (Bayad Center, MLhuiller, or any SM Business Centers and Bills Payment counters at Savemore and SM Hypermarket)
- Credit Cards
As you are probably aware, there are numerous ways to pay for your Pag-IBIG payments. The greatest alternative, however, is one that allows you to pay for your MP2 payments in the most simple and cost-effective manner possible.
However, if you wish to pay your MP2 contributions in a more convenient manner, you can utilize the new Virtual Pag-IBIG option. Use this payment method if you’re sending little amounts of money, such as Php 500 to Php 1,000. (for a minimal convenience fee).
Is MP2 Savings better than the regular savings of Pag-IBIG Fund?
The two savings program of Pag-IBIG has their own goods. Regular savings is a mandatory contribution if you’re an employee. If you wish to save more, you may increase your regular savings or optionally, open an MP2 savings account.
The MP2 savings program is a great alternative if you wish to slowly expand your money over time. However, if you want to apply for a Pag-IBIG housing loan, you need to increase your monthly contribution. Higher monthly contributions will allow you to qualify for a larger loan amount.
However, if you have both goals in mind and can afford to save more, it is advisable to raise your contribution while still saving under the MP2.
What is the better option between annual payout or end of the five-year term?
The best MP2 dividend distribution method is determined by your financial objectives. Each alternative offers advantages that aid in the achievement of specific objectives.
The yearly dividend distribution choice results in a smaller total dividend and is ideal for customers that want consistent income to fund annual expenses such as family trips, birthdays, and anniversaries. This is also ideal for retirees who want to retain the value of their money while earning an additional income each year to bolster their retirement fund.
If you want to have a large dividend annually, you need to save a larger amount monthly.
Compounded savings, on the other hand, with a 5-year maturity time, is worth the wait since it allows you to use the power of compounded interest.
You can use your savings for your medium-term goal like opening a business or buying your favorite motorcycle.
How to claim my MP2 savings?
When your MP2 account achieves maturity, Pag-IBIG will send you a notice letter with details on how to collect your funds.
The MP2 profits (dividend + cumulative savings) are exclusively distributed by check by the Pag-IBIG Fund.
The following are the processes for claiming your MP2 savings:
Step 1: Visit any Pag-IBIG office to make a claim within one month of the maturity of your account. Bring two good photo IDs.
Step 2: Wait for a confirmation message from the Pag-IBIG Fund telling you that your check is available for pickup after you’ve submitted a claim at the Pag-IBIG branch.
Step 3: Return to the Pag-IBIG branch to collect your cheque. To prove your identification, bring two valid IDs.
If you do not intend to spend your MP2 profits within the next five years, you can reapply for a new MP2 account and make a one-time payment with the amount received.
How to monitor my MP2 savings?
You can check your contributions online in many ways. For a detailed guide, you can read our article here.
Can I open an MP2 savings account if I’m OFW?
OFWs who satisfy the conditions outlined previously in this handbook are eligible to participate in the MP2 savings program. They can do so by completing the standard online application for a Pag-IBIG MP2 account.
You can ask your family members in the Philippines to pay your contributions at any Pag-IBIG branch once you have registered an account online using this form. You can also pay your dues using any of the following Overseas Remittance Partners:
- I-Remit Ventaja (including PayPilipinas)
- I-Text Mo Sa Pag-IBIG
- Philippine National Bank (PNB).
- I-Remit Ventaja (including PayPilipinas)
- Philippine National Bank (PNB).
Overseas Filipino Workers can pay the Pag-IBIG MP2 online using the Virtual Pag-IBIG payment option. However, depending on the amount, there is a convenience charge of 1.75 percent. If you pay in little sums, we would recommend this as a payment method. If you have the time to make a one-time payment, we recommend that you do so when you return to the Philippines and pay over the counter at the Pag-IBIG office or through Bayad Centers. Otherwise, if you pay a one-time large sum online, you would be charged a significant convenience fee.
Have you signed up for the MP2 Savings Program yet? If not, what is it that is preventing you from doing so? As discussed before in this article, there are various advantages to using this application. Consider joining in the MP2 savings program if you want to maximize your savings in a certain length of time, and let us know what you plan to spend your profits on in the future by leaving a comment in the box below!