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.

pag-ibig-II-save-money

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There’s a 5% interest rate, but this is only given to time deposits of at least 1 million pesos and should not be withdrawn within 5 years.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 pagibigfund.gov.ph.

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.

Note:

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

297 Comments

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  1. Hi ms nora good day i just registered my MP2 today but when i try to pay online using my new MP2 # tru credit card and metrobank online banking it failed so do i have to pay it on the nearest Pag-ibig branch?or payment centers!thank u for ur reply????

  2. Hi mhee, it’s best to make your first MP2 payment at your Pag-ibig branch (branch where your Pag-ibig 1 records are based) so your next MP2 payments will be forwarded to that branch. You can make your second and succeeding payments at Bayad Center or SM Business Center. Based on Pag-ibig’s payment guidelines, credit card payments are not yet available for MP2.

  3. Hi Ms. Nora, I read on one of your replies that you earn more dividends when your contributions are spread out within a year rather than putting it in as a lump sum. Can you please share why this is so? I was planning to put lump sum 50k, and just wait for 5 years, not sure if it’s a good idea.

  4. Hi Drigo, your plan to save with MP2 is good. Sorry about my replies that you’ve read — maybe I failed to explain clearly, but that’s not what I meant. Dividends are not bigger if the payments are spread out within a year. The question that time was about one-time payment of a big amount to MP2. Pag-ibig does not have information about one-time payments, so I suggested to the person asking that she spreads out her big payment within the year, as anyway, the application of dividends is yearly, not monthly, not quarterly. The total savings within the year is computed for dividends; it does not matter in which months they were paid, as long as they were paid within the year.

    For example, if you want to put into MP2 a lump sum or one-time payment of 60k, I suggest that you pay the 60k, spread out as a monthly payment of 5,000 for 12 months (from Jan to Dec 2016). When the dividend rate is determined in March or April 2017, the dividend rate will be applied to 60k. If the dividend rate will be 4.5%, then your dividend for 2016 will be 2,700 (from 60k x 4.5% = 2,700). Your balance as of January 2017 will be 62,700. Calculations are estimated — I’m not sure about Pag-ibig’s formula.

    To be more accurate about my answers, I called Pag-ibig to ask about one-time payments, and the Pag-ibig officer said that this type of MP2 payment is allowed; you just need to inform the cashier that it’s a one-time payment with a term of 5 years.

  5. Good afternoon po. My Pag ibig II had just matured last September 2015. I saved 2000 pesos monthly with the hope that after five years of saving faithfully I will be receiving 139,687 pesos as is posted here in your website. Along the way, I found out that one month saving was not deducted, thus I was able to save a total of 118, 000 pesos only. After more than one month of processing, I found out, to my dismay, that I will be receiving only a little more than 124, 000 pesos. There is a big difference on what is posted in this website.
    I wrote this letter to verify the correctness of the computation. Malaki po ang tiwala ko Pag ibig Fund.
    I look forward for your response. I hope that you will put the welfare of your members on top of your priority. Thank you very much po.

  6. Hi Daisy, yes, you’re right about your concern. Why is the total dividend only a little more than 6,000? In the sample on my blog, the dividend rate was 6% (rates were higher in past years). Even if the average dividend rate for the past 5 years was 4.2, your dividend total should have been higher. Call Pag-ibig or visit your branch and request for a recomputation of your dividends. Tell them that they have a sample on their website Sample Computation with 4.76 Dividend Rate — a monthly saving of 500 pesos for 5 years, and the total dividend is 3,845.94. From Pag-ibig’s statements, the average dividend rate from 2010 to 2015 was 4.2%. Even if 4.2 is a bit lower than 4.76 (the one used in the sample), your total dividend rate should not be just a little more than 6k. I hope you can update us again.

  7. Hi Ayessa, yes, Pag-ibig says that we can have many MP2 accounts and maintain our original P1 account. In fact, MP2’s requirement is to maintain P1 while saving with MP2.

  8. Hello Ms. Nora, I have applied for pag-ibig 1 in Urdaneta Pangasinan branch because I used to wok there, now I’ve decided to enroll to pag-ibig 2, and I’m currently working here in Makati. I asked our payroll officer to include my contribution to MP2 as a salary deduction, and as per her advise,she will forward my application to MAKATI branch. Is it still okay that my MP1 was in Urdaneta, and for MP2 here in Makati? or do I have to personally apply my application to Urdaneta Branch?
    If in case, I’ll be transferring to other company,say I’ll resign from my current work, will this post problems in my records? and what are the necessary steps to do.
    Hoping for your immediate response Ms. Nora
    Thank you for answering all our queries

  9. Hi Lux, it’s okay if your MP2 savings records will be stored in Makati because you work in Makati. I think your P1 will also be filed in Makati as your company files there in Makati. If later on, you work in another city, your P1 savings will be filed at the Pag-ibig branch where your new company is filing. If in the future, Pag-ibig is still not centralized, you can later consolidate your records in one Pag-ibig branch using this form: Transfer of Member’s Records.

  10. Hi,Ms.Nora!I Stopped working and make contribution for pag ibig for almost 4yrs now and i have an outstanding balance with my previous loan..can I Still avail this MP2 savings program?if YES,HOW?THANKS!I am a member for 12years.

  11. Hi Lannie, if your loan has not been paid after the 24th month, Pag-ibig will use part of your savings to pay off your loan (they call it offsetting). Yes, you can save with MP2, you can register online to get an MP2 account no.. Scroll down to see MP2 Enrollment system. After getting your MP2 account no., you can start paying, but it’s better to make your first payment at your Pag-ibig branch, so you can set your records there in your branch.

  12. Hi ms nora, can we have a joint account with MP2? which is better, apply at the nearest pag-ibig branch or with employer? thank you for the clear updates about MP2. very much appreciated 😀 more power

  13. Hi Jaylord, sorry, there’s no joint account with MP2. Get first your MP2 account no. at the Pag-ibig’s website: MP2 Enrrollment Then ask your employer if they can remit your payment for your MP2 every month. If they’re not willing, you can make your first payment at your Pag-ibig’s branch then at Bayad Center/SM Business Center for succeeding payments.

  14. Fyi only pag ibig branches are allowed to collect Mp2 contributions. All the payment made via Bayad Center will go straight to your MP1 account. They dont allowed multiple MP2 accounts.

  15. Hi Christian, thank you very much for sharing important info. It’s only now I’ve learned they have stopped approving more than one MP2 accounts. I hope more members will write Pag-ibig requesting them to enable MP2 payment acceptance at Bayad Center/SM Business Center to help members far from Pag-ibig branches. Thanks again, Christian :)

  16. Hi mrs nora :D, is there a limit to the amount saved and frequency of saving with the MP2 program? for ex. saving 100k in one year? or if in one month, we make 2 payments? Is that allowed?

  17. want to know after maturity date of 5 years can I withdraw only the incurred interest or dividends and retain the original savings of whatever amount I deposited in MP2? What could be the dividend rate applied to a 2nd timer investor like me for another 5 years? will it be the same 4.75%? thanks

  18. Hi Jaylord, no, there’s no limit. You can save as much as you want. It’s the SSS PESO that has a 100k-maximum limit per year. About paying twice in a month: I haven’t read of a specific rule on paying more than once every month, but I think it’s better that you pay once every month to prevent any confusion about your payments in the future. The TAV report lists payments per month. Save via your bank account, and then pay once per month.

  19. Hi Rodel, I think no. I haven’t read of a partial withdrawal like what you’ve described. What you can do is withdraw all, encash your cheque, get the amount you want, apply for another MP2 account no., then make a one-time payment MP2. The dividend rate varies from year to year; it’s computed based on Pag-ibig’s earnings for the year. Over the past years, Pag-ibig declares the dividend rate every March/April of the following year. Your advantage, if you reinvest your MP2 money is that you can earn much immediately on the first year, as compared to those with initial savings only.

  20. Good day! How to get a Security Code? Because in your website, there’s a MP2 Online Services for me to be able to check how much I already earned. Thank you.

  21. Hi Francis, sad to say, there’s only the OFW Member’s Contribution Verification system for OFWs. For local members, we have to visit our branch to see our total contributions. You can also call 724-4244. The MP2 service on the website is for MP2 enrollment only. If you want to enter that system and you don’t have a Security Code, click “No Pag-ibig MID No.” even if you have a MID no. You will use your Tracking no.

  22. A few years back (can’t remember how many) my husband received a notice of his fund2 contribution having matured. Unfortunately we were not able to provide one requirement, the list of contributions he made and was told to just collect when he turns 60. He’s only months away from it, can he still collect it? What if we can’t procure the contribution list requirement because we had difficulty before, the acctg personnel who used to handle it did not respond to our request. What can we do?

  23. Hi Penny, yes, your husband will be able to claim his savings and dividends; those belong to him. Your husband should be able to easily request and quickly get a list of his contributions from the customer officer or the one in-charge of printing contributions. I don’t know why they were not able to print the list for you when you claimed years before. Anyway, his savings should have earned more dividends because his money stayed with Pag-ibig for more years.

  24. What happens if I enrolled through online and im working abroad, will they receive po if I pay here even if I registered online?

  25. Hello po first time to apply mp2. registered through online po. I’m here in uae. If I pay here will they be able to receive it? first time to remit. the embassy is far from here.

  26. Hi Sharon, it’s good you want to save more. Yes, Pag-ibig will receive your payments as long as you send through Pag-ibig’s remittance partners. Pag-ibig’s partners are IRemit and Ventaja and their overseas partners. Here are lists of IRemit remittance partners in Abu Dhabi. IRemit remittance partners in Dubai Comment again if you are in another UAE city and I’ll find remittance partners. By the way, are you paying also Pag-ibig 1? Pag-ibig requires that you pay both Pag-ibig 1 and MP2. I suggest that you pay first Pag-ibig 1 for the whole year (for example, 200 x 10 months (Mar to Dec 2016) = 2,000. Use your Pag-ibig MID No.). Then pay MP2; use your MP2 account no. On the remittance form, write the amount in peso, although you will pay in dinar.

  27. Hi po, ofw po ako. gusto ko po malaman kung paano ba mag enroll sa mp2. pwede po ba ako mag enroll sa mp2. di ko na rin po nababayaran ang contribution ko kasi malayo dito sa akin ang lugar kung saan pwede mag bayad ng contribution. anu po ba dapat ko gawin? gusto ko sana ng mp2.

  28. Hello Ms Nora, I am planning to apply for my MP2 savings. Am I allowed to make my own payment for MP2 instead of salary deduction by my current employer? Can I make my monthly payments at the bank? What bank? Can I make my payment annually like 60K?

  29. Hello Miss Nora, pano po ma view yung contribution sa MP2 account ko.sa website kc ng pag-ibig, OFW Member’s Contribution Verification lang ang option.gusto ko sana malaman kung na transfer na yung claim ko sa pag-ibig 1 proceeds to my MP2 account.

  30. Hi Charo, yes, you can save with MP2 separately from your company. For MP2, you have to pay at your Pag-ibig branch. And since you plan to make a one-time payment, it’s best that you pay at Pag-ibig. Yes, you can make a one-time payment for the year. Just write, for example, 60,000 — payment for March to Dec 2016 (6,000 x 10 months). Pag-ibig accepts MP2 payments through GCash, but I think it’s better that you pay at your Pag-ibig branch.

  31. Hi Nora, May I know how much is the present annual interest earned in MPl and MP2?

  32. Hi Wilson, pay MP2 at your Pag-ibig branch. I asked Bayad Center about MP2 and they don’t know MP2. They know only Pag-ibig 1. If you have GCash, you can pay via GCash.

  33. Good Day Nora. Can I pay MP2 my self additional to my employer(salary deduction) whenever I have extra cash for bigger investment, also can I request to my employer to stop my MP2 deduction(just in case if I need funding for other stuffs)? Can I pay MP2 at any Pag-ibig Branch and can I check my payments online just to verify my savings with MP2, if not what other ways can I check my MP2 savings? By the way this forum is very informative, thanks Nora :-).

  34. Hi Herbert, yes, pay at your Pag-ibig branch. The check should be payable to Pag-ibig Fund. Be prepared to write your name and MP2 account no. at the specific space allotted at the back of your check (instructions mostly at the cashier counter).

  35. Hi Herbert, yes, you can make additional MP2 payments at your Pag-ibig branch. Xerox and keep your receipts. About stopping employer-deduction some of the time: It depends on your employer’s patience, but usually employers do not like that kind of arrangement because it disrupts their routine. If you want flexibility, you can request your employer to stop your MP2 deductions, and just pay MP2 to Pag-ibig directly. However, this will inconvenience you and will not be helpful to your goal of saving more. About checking online: Sorry, Pag-ibig does not yet offer this service to local employees. You can ask for a copy of your MP2 savings or your MP2 total maybe every year at your Pag-ibig branch. Thanks a lot for appreciating my blog. Great to know you’re saving more.

  36. Hi ms Nora. Ask ko lang, ang p1 ba e nagtataas ng singil? Di kasi alam ng mother ko na nagbukas ako ng mp2 account. Then I work here in abroad. Bale sya na pinaghuhulog ko sa mp2 account ko. Nung minsan naghulog sya sa pag ibg branch e naipasok daw sa p1 ung 1500 pesos.(Ang alam ko kasi nasa 100-200 pesos lang per month ang p1) Imbis na sa mp2. Then I check ayun nasa p1 nga, may chance ba na mailipat pa yun sa mp2?

  37. Hi Andrea, if you’re paying MP2, pay at your Pag-ibig branch. If Pag-ibig 1, it’s better that you make your first payment at the branch nearest your permanent residence, so you’ll establish your Pag-ibig branch, and then pay your second and subsequent P1 payments at Bayad Center.

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