Pag-IBIG MP2: What is it and How to Start Saving

Let’s dive into learning more about MP2 and whether or not it is a good option for you.

I talked a lot about how important saving money is and how you can save money from things like your groceries and some tips on how you can save money while you are still a student but I think one of the questions is where can you save your money to earn more interest?

Where you save money really depends on your goal. Saving money in the bank is discouraged by many because of the low interest rate but then again, you have to consider your goal. We can discuss that on another topic as we will be discussing more about MP2 as an option for your savings in this article.

What is MP2 Savings?

MP II Savings, also known as Modified Pag-IBIG II Savings, is a government-backed investment program offered by the Home Development Mutual Fund (HDMF), commonly known as Pag-IBIG Fund, in the Philippines. It is designed to provide individuals with an alternative and more lucrative option for saving and growing their money.

This Pag-IBIG savings is an enhanced version of the regular Pag-IBIG savings program, offering higher interest rates and greater potential returns. The program allows eligible members to contribute a portion of their income to their MP2 Savings account on a voluntary basis, in addition to their mandatory contributions to the regular Pag-IBIG savings.

How does MP2 savings work?

MP2 works like a regular savings account but this savings is specifically designed for Pag-IBIG Fund members.

That means you have to be a paying member of Pag-IBIG I to be able to apply for this program. If you are not yet a member of Pag-IBIG I. You can register for P1 first and become a voluntary member with a 200 pesos contribution monthly and then open your MP2 once you paid your first contribution.

Your minimum contribution per remittance is 500 and you can start opening an account with as low as Php. 500.00.

MP2 earns a higher annual interest rate at more than 4% per annum compared to most banks that normally offer .05% per annum.

This savings option is also open to pensioners and retirees who were previously affiliated with the Pag-IBIG Fund.

Advantages and Disadvantages

Advantage

1. Earns Higher Interest 

One of the significant advantages of saving in MP2 is that it allows you to earn higher interest on your savings. Unlike traditional savings accounts, MP2 Savings offers a more attractive interest rate, providing you with the potential to grow your money at a faster pace.

2. Government Guaranteed

MP2 Savings are government-guaranteed, so you are assured of your interest earnings.

3. NO tax deductions

These savings do not deduct any taxes from your earnings. Unlike some other investment options or savings accounts, where taxes may be imposed on the interest or returns you earn, MP2 Savings allows you to enjoy your earnings without any tax deductions.

4. Saving Flexibility

One of the key advantages of MP2 Savings is its flexibility. You will have the freedom to decide on the amount and frequency of your contributions, this allows you to tailor your savings strategy according to your financial goals and capabilities.

You can put in a certain amount of money every month or on an installment basis; you can also do a one-time big-time amount; or you can do both one-time big-time deposits on top of your regular installment deposits.

5. Inclusive for Various Members

MP2 Savings is open to a wide range of individuals, including employees, self-employed individuals, overseas Filipino workers (OFWs), voluntary contributors, and even pensioners and retirees who were former Pag-IBIG Fund members. This inclusivity makes this accessible to different individuals with varying financial backgrounds.

Disadvantages

1. Lock-in Period

MP2 Savings has a maturity period of five years. During this time, your savings are not readily accessible, and early withdrawals may result in lower earnings or penalties. If you anticipate needing immediate access to your savings or prefer more flexibility in terms of withdrawal options, the lock-in period of MP2 Savings may be a drawback. You may claim your savings anytime upon its maturity. If you do not claim or withdraw your savings, you will continue to earn dividends based on the regular Pag-IBIG Savings Program’s (P1) rates for two more years.

Personally, I think this feature of the Modified Pag-IBIG Fund II could also be an advantage because you will not be tempted to withdraw and spend your savings anytime.

2. You have to be an active member of P1 

Before you can open your MP2 savings you have to have at least one month’s contribution for Pag-IBIG 1 or P1 and you have to continue paying your P1 contribution as well.

I also do not think this is much of a disadvantage because if you have a P1 this will allow you to avail of their loan services including a housing loan. P1 also earns interest it’s just that you will only be able to withdraw this at your retirement age.

MP2 Interest

The MP2 provides dividends to its members annually and the interest depends on Pag-IBIG’s financial performance.

The interest rate for MP2 Savings is declared annually by the Pag-IBIG Fund. The specific interest rate can vary from year to year and is subject to the fund’s decision. The rates offered for these savings are typically higher than those provided by regular savings accounts and are often designed to be competitive and attractive to investors.

Here’s a table showing the interest rates for the past years since it started.

You will notice that the interest rate is going up and it is way better than what most banks offer.

The 2023 Interest rate is at 7.05% which is higher than last year’s interest rate. So congratulations to the ones who were able to save last year!

How to Register to MP2

To register for the MP2 savings, you have to make sure you have an existing Pag-IBIG membership first. If you don’t have a P1 yet, you have to register for a P1 with a voluntary contribution of 200.

If you have been employed, you can ask your employer for your Pag-IBIG number or you can go to the nearest Pag-IBIG office and inquire of your Pag-IBIG number. Just bring a valid ID.

Manual Submission

The first way of enrolling in Pag-IBIG MP2 is through the submission of an application to the nearest branch in your place.

Requirements:

Here are the requirements you need to submit when applying for MP2.

The Basic requirement is a must and choose one from the Additional Requirements. The Additional requirement basically needs to prove that you have a source of savings. So when I applied, I submitted a photocopy of my most recent payslip.

Basic Requirements

1. Modified Pag-IBIG II Enrollment Form (HQP-PFF-226) (1 Original)

2. Valid ID acceptable to the Fund (1 Photocopy)

Additional Requirements

3. Philippine Passport (1 Photocopy) (For former natural-born Filipino)

4. Proof of Income/Source of Fund (as applicable)

▪ Employment Income

– One (1) month’s latest Payslip (1 Photocopy)

– Latest accounts or tax declaration, if self-employed (1 Photocopy)

▪ Savings/Deposits

– Bank Statements reflecting the balance (1 Photocopy)

▪ Property Sale

– Contract of Sale (1 Photocopy)

– TCT/CCT (1 Photocopy)

▪ Sale of Shares or Other Investment

– Sales Contract or similar document (1 Photocopy)

– Statement of Account from Agent (1 Photocopy)

– Transaction Receipt/Confirmation (1 Photocopy)

– Shareholder’s Certificate (1 Photocopy)

▪ Loan

– Loan Agreement (1 Photocopy)

▪ Company Sale

– Contract of Sale (1 Photocopy)

▪ Company Profits/Dividends

– Latest Audited Financial Statement (1 Photocopy)

– Latest Management Account (1 Photocopy)

– Board of Directors Approval (1 Photocopy)

– Dividend Distribution (1 Photocopy)

– Tax Declaration Form (1 Photocopy)

▪ Gift

– Letter from Donor (explaining the reason for the gift and the source of donor’s wealth) – (1 Original)

– Certified Identification Documents of the Donor – (1 Photocopy)

– Donor’s source of wealth – (1 Photocopy)

▪ Maturity/Surrender of Life Policy – Policy (1 Photocopy)

▪ Other Income Sources

– Appropriate supporting documentation – (1 Photocopy)

Steps on How to Enroll Manually

1. Go to the nearest branch.
2. Ask for the MP2 Form – they normally give you the form to fill out. But you can also download it online from Pag-IBIG here.
3. Attach the requirements – Make sure you bring a photocopy of one valid ID and if your source of income indicates Employment income, you need a photocopy of your latest payslip.
4. Submit these requirements to the right department. You can ask the desk assistant where to submit it. The Pag-IBIG employee will check your requirements and give you an MP2 number and your own copy of the application.
5. You can then go back to the cashier to deposit your first saving contribution.

 Congratulations you now have an MP2 account.

Online Application

The online application option is an available option if you already have an online Pag-IBIG Account.

You can check out the steps on how to apply for MP2 online here.

How do you Pay your MP2 Contribution?

Paying your Pag-IBIG Contribution is easy because they offer different payment options.

Here are some of the ways you can pay your Pag-IBIG MP2 contribution.

1. Over-the-Counter Payment

The very first option is to visit any Pag-IBIG branch and make your payment over the counter. Walk into the nearest Pag-IBIG branch in your area, fill out the necessary forms, and provide your MP2 account number.

You will get a receipt for your payment.

2. Online Payment/ Mobile Payment Apps

Another option that I think is the most convenient for us nowadays is through online payment. You can pay your MP2 through Gcash, through your BPI mobile App, Pay by Maya (PayMaya), or through some other accredited banks. You can check your own bank to see if you have this option.

3. Salary Deduction

You can also opt for a salary deduction. If your employer is deducting your Pag-IBIG contributions from your salary, you can also choose to have your MP2 contributions deducted this way. 

Talk to your HR about this and they should be able to guide you through the process.

4. Bayad Centers

If you’re paying your bills through Bayad centers, then you can also include your contribution payment through this option.

Some authorized payment centers, such as Bayad Centers, may accept MP2 contributions. Check with the specific payment center for availability.

5. Bank Channels

Certain banks may allow you to pay your MP2 contributions through their online banking platforms or over-the-counter services.

Accredited Payment Centers:

• SM Business Service Centers
• SM Hypermarket
• Savemore
• Bayad Center and its authorized partners
• LANDBANK
• Metrobank
• ECPay (thru 7-Eleven stores and merchant partners)
• M Lhuillier
• CashPinas Moneygment App (Credit to Account, DragonPay, ECPay, PayPal and 7-Eleven stores)
• GCash (mobile payment)
• Pay by Maya (mobile payment)

Frequently Asked Questions:

I am a member of a Facebook group and I noticed that every time someone mentioned their MP2 savings. A lot of people people asked a lot of questions about it.

Here are some of the questions I normally see with the answers for each question

1. Can I have an automatic payment setup?

Yes, you can set up automatic payments for MP2 through your employer. You can do this by choosing Salary Deduction in the form. You have to be locally employed for this option.

2. Can I deposit an additional amount if I am in a salary deduction mode?

Yes, you can deposit extra while in salary deduction mode. Make sure you have your MP2 account number and pay online or pay directly at any MP2 branch.

3. Can I have an MP2 even if I don’t have a P1?

No, one of the requirements for MP2 is that you have to have active regular Pag-IBIG savings. 

4. Can I still open MP2 even if I was not able to pay my P1 contribution for a long time?

Yes, you just have to reactivate your regular savings by paying the P200.00 minimum contribution for P1.

5. Do I need to have a consistent amount of MP2 savings monthly?

No, there’s no requirement for consistent monthly amounts in MP2 savings. You can save any amount, but the minimum amount is 500.

6. How do I access my Pag-IBIG online account to check my MP2 savings?

Use your Pag-IBIG online account to check MP2 savings. If you don’t have an account yet, you can read our guide on how you can create an online account.

7. Who will be the beneficiaries of my MP2 savings?

You can assign beneficiaries for your MP2 savings.

8. Do I need to continuously pay my MP2 monthly just in case I will lose my job?

No, You don’t need to keep paying MP2 if you lose your job and your existing savings will continue to earn interest.

9. Does MP2 apply compounding interest?

Yes, MP2 offers compounding interest.

10. Can I have more than one MP2 account?

Yes, you can have multiple MP2 accounts if you want to save for different goals.

11. I started my MP2 but was only able to save once, Can I still continue saving in that same account?

Yes, you can continue saving in the same MP2 account as long as it has not reached the maturity date yet.

12. What is the easiest way of paying MP2? 

This may depend on your situation, Payment methods include online through Gcash, Paymaya, and more and over-the-counter

13. Do I need a loyalty card to be able to apply for MP2?

No need for a loyalty card to apply for MP2.

14. I already have an MP2, can I pay my MP2 savings online for my very first savings?

Yes, you can pay your first MP2 savings online.

15. Can I apply online for MP2?

Yes, you can apply for MP2 online if you already have an online Pag-IBIG account.

16. Can I reapply after 5 years?

Yes, you can reapply after maturity or start another MP2 account before the maturity date.

17. Can I open MP2 even if I’m not an active member?

No, You have to open a regular savings first before opening an MP2 savings.

Conclusion

MP2 is a good option for those who want to start saving money with a long-term goal with a minimum of 5 5-year time frame. This will also be very helpful for people who can’t stop themselves from taking their savings and using them for buying unnecessary things because of the lock-in period of 5 years.

The great thing about this is that it has a higher interest rate than banks, so your money will have more earnings than keeping it in your bank.

So should you start saving in MP2?

My answer to this would be yes if you have a long-term goal you want to save for.