Save Money with Modified Pag-ibig 2, Get Higher Earnings

Updated February 12, 2018

You want to save and grow your money?  Modified Pag-ibig 2 or MP2 is a great savings plan.  It has advantages over regular savings accounts, time deposits, or pre-need plans. Any Pag-ibig 1 member can save with MP2.

pag-ibig-II-save-money

What are the advantages of Modified Pag-ibig 2?

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 2016, Pag-ibig declared the highest dividend rate ever for Pag-ibig 1. It was 6.93%!
And since MP2 dividend rates are always bigger, the dividend rate for MP2 for the year 2016 must be around 7%!
In 2010 and 2015, it was 5.5% and 5.33%, respectively. For the other years, it ranged from 4.58% to 4.68%

See here Pag-ibig dividend rates over the years.

MP2 earnings are not taxed. Interests on savings accounts are taxed.

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There’s a 5% interest rate, but this is only given to time deposits of at least 1 million pesos and should not be withdrawn within 5 years.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, time deposits are accessible — you can ask to withdraw them anytime, even if it’s not yet your due date or renewal date.

Savings accounts 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 Sample Table of Expected Earnings from Pag-ibig Fund; 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

New Sample Computation from Pag-ibig Fund

Monthly Savings Total Savings After 5 Years (at 5.5%)
500 34,484.17
1,000 68,968.33
1,500 103,452.50
2,000 137,936.66
3,000 206,905.00
4,000 275,873.32
5,000 344,841.65

 

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 to any amount.

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 plans or investment/insurance plans, your 50k, 100k, 150k savings or more are forfeited (mawawala sa iyo parang bula) if you’re not able to complete your plan. 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 savings.  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 down payment, 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. Or in case renewal is no longer allowed, you can withdraw it, and then invest all of it under another MP2 account number.

Who can save with Modified Pag-ibig 2?

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 Modified Pag-ibig 2?
Enroll and get your MP2 account number.
You have 2 enrollment options: Online and at a Pag-ibig branch

1. Online
Have with you your Pag-ibig MID No.
Go to Pag-ibig Fund‘s website.
Click “e-services”
Click “MP2 Enrollment System”
Fill-up online MP2 enrollment form and submit
You will see an MP2 page showing your MP2 Account no.
Print the page
Go to your branch, and present your MP2 enrollment page
You can start making your payments.

2. Pag-ibig branch
Have your Pag-ibig MID No.
Bring your valid ID
Fill-up a Modified Pag-ibig 2 Registration Form (MP2RF)
Submit. 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 or visit your Pag-ibig branch and renew it, or reinvest it under a new MP2 account number; otherwise, your 5-year MP2 savings total will, after the 5-year period, get the Pag-ibig 1 dividend rate, which is lower than than the MP2 dividend rate.
Saving Money with Modified Pag-ibig 2

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