Saving Money with Modified Pag-ibig II — Higher Earnings, Government-Guaranteed

Updated April 1, 2015

You want to save and grow your money?  Modified Pag-ibig II (MP2) is a great savings plan.  It has advantages over regular savings accounts, time deposits, or pre-need plans.


What are the advantages of Modified Pag-ibig II?

1.  Guaranteed by the Philippine government.

Your savings will not be lost. Your savings are guaranteed by the Philippine government.  Pag-ibig Fund will not vanish like the pre-need firms mismanaged by families who never returned what the planholders sacrificed to pay over many years.

2.  The interest rate is much higher.

In April 2010, the annual interest rate for Modified Pag-ibig II was 5.5% — much higher than savings account rates that are usually between 0.5% to 1.75%. MP2 earnings are not taxed. Interests on savings accounts are taxed.

The Pag-ibig board can also declare an interest rate of more than 5.5%.

If you look at time deposits, rates range from only 1.75% for deposits of at least 10,000 pesos to 2.75% for at least 5 million pesos.
There’s a 5% interest rate, but this is only given to time deposits of at least 1 million pesos and should not be withdrawn within 5 years.

Another thing, bank savings accounts are accessible — you can withdraw them anytime.

They also have maintaining balance requirements, and if you are not able to comply, instead of saving money,  you lose 300 pesos to 500 pesos or more for each month you fall below the maintaining balance.

The MP2 interest rate can go up, if the Pag-ibig board sees that Pag-ibig earned much more for a certain year.

Look at this Pag-ibig table of expected earnings; 6%  was used as annual interest rate:


Monthly Savings Total Savings After 5 Years (at 6%)
500 pesos 34,922 pesos
1,000 69,844
1,500 104,765
2,000 139,687
5,000 349,218


3.  Interest earnings for MP2 are tax-free.  No tax deductions.

For time deposits,  there’s a 20% withholding tax on the interest income, except for 5-year tax-free time deposit products. The same with savings accounts, there’s also 20% withholding tax on the few pesos earned as interest.

4.  Low monthly minimum savings amount, which is 500 pesos per month. Affordable.

You can increase your monthly MP2 savings anytime.

5.  All your savings are still yours, even if you missed paying for some months, or if you’re unable to continue contributing to the program.

If there are gaps in your contributions, you are not penalized. You get back all what you’ve saved, plus your dividend earnings.

With pre-need, your 50k, 100k, 150k savings or more are forfeited (mawawala sa yo parang bula) if you’re not able to complete your plan, even if your reason is valid. You signed the contract, and the forfeiture policy is in that contract. If you pre-terminate early, you get nothing back. If you pre-terminate after 3 or more years, you get only a little of what you’ve paid.

6.  You CANNOT withdraw your Pag-ibig savings anytime.  This is great, in the sense that you cannot just withdraw to buy a useless gadget on sale.  Your friend or relative cannot also force you to withdraw so they can borrow —  “Ay sori talaga, nasa Pag-ibig kasi savings namin eh, hindi puede iwidro.”

7. You CANNOT borrow it.  There’s no loan program for MP2 members.  The short-term loan program is only for the mandatory Pag-ibig I program.  Again this is good — your savings remain untouched.

8. Available for withdrawal after 5 years. Oh ayan, puede nang iwidro! For tuition, or for a house and lot downpayment, or outright property purchase, or business capital.

If you like to save more, you can keep on adding to your MP2 by renewing it for another 5 years.

Who can save with Modified Pag-ibig II?

Anyone who is already a member of Pag-ibig I.  You should first become a Pag-ibig I member, as Pag-ibig I is mandatory. Pag-ibig II is voluntary.  You can be an MP2 member whether you’re a land-based OFW, seaman, employee, self-employed or business owner.

How do we start saving with Pag-ibig II?

Apply for your MP2 account no. online at

Or visit any Pag-ibig branch with your IDs and apply for Modified Pag-ibig II membership.  Fill out a Modified Pag-ibig II Registration Form (MP2RF).  You can start with 500 pesos, or go ahead with 5,000 pesos.


If you’ve reached your MP2’s 5-year term, and you want to renew it, contact Pag-ibig and renew it, otherwise, the interest rate for your MP2 savings will be the same as Pag-ibig 1, which is a bit lower than MP2.

Saving Money with Modified Pag-ibig II


Add a Comment
  1. so that means we’re not required to withdraw at maturity date, as long as we renew so it will earn more? thank you so much ms nora?

  2. Hi erda, yes, this renewal instruction is in the Terms and Conditions section of the MP2 enrollment form. Thanks too

  3. have you got any information on how to pay MP2 online? the current online services is for MP1 only.

  4. Hi Juan, you can use This is owned by Ventaja, a Pag-ibig-affiliated remittance firm. PayPilipinas is mentioned by Pag-ibig here. You register first, then fund your PayPilipinas account through your credit card or through your online banking (affiliated banks are Bancnet banks, BPI, ChinaBank, Metrobank, PNB and RCBC). After funding, you can now pay MP2 through PayPilipinas.

  5. Thanks Nora. i will check this service and shall get back to you with my feedback. i may as well share my experience to you to further help my fellow OFWs. cheers to your site!

  6. Hi Juan, that’s so nice of you. Look forward to your feedback. Yes, your experience will surely help other OFWs. There are really a lot asking about these things. Thanks again, and your good comments mean a lot to me as a blogger.

  7. Good Morning. It’s been 5 years. I wish to withdraw my PagIBIG 2. Is there a downloadable form to apply for withdrawal, and what are the required documents that need to be attached to the application for withdrawal of PagIbig2. Is there also a downloadable form if I want to continue PagIbig2 even though I will withdraw my 5-year savings right now? Thank you.

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