How to Earn Passive Income with Pag-IBIG MP2 in 2022

Do you know you can earn passive income with Pag-IBIG or the Home Development Mutual Fund (HDMF)?

Why don’t you try MP2 or the modified Pag-IBIG savings program?

Since its inception in 2010, MP2 has paid out higher and tax-free dividends compared to time deposits and savings accounts.

What is Pag-IBIG MP2?

The Modified Pag-IBIG II (Pag-IBIG MP2) Savings Program is an optional 5-year savings facility created for active Pag-IBIG Fund members who want to save more and receive higher dividends.

Every employee must contribute to Pag-IBIG regular savings. It is required. What you put in determines how much you can borrow to build or buy a property. It pays some dividends.

But if you want higher dividends, MP2 may be for you. It’s optional, therefore you have to open it on top of your usual savings.

Pag-IBIG MP2 Dividend Rate History

Pag-IBIG MP2 dividends average 6% from 2011 to 2020. In 2020, the dividend rate for MP2 savings was 6.12%.

The dividend rate for 2021 was recommended at 5.66%. However, the rate is still subject to approval by the Board of Trustees. The Pag-IBIG Regular and MP2 Savings dividend rates were announced on February 24, 2022, on Pag-IBIG official Facebook page.

Pag-IBIG Regular and Pag-IBIG MP2 Savings Dividend Rates for 2021 were announced on February 24, 2022.

After the board approval, the amount will be credited to the member’s account within the second quarter of 2022.

The dividend rate (for last year’s performance) is typically announced in the first quarter of the current year. Along with the company’s financial reports, it is published on the internet and announced in the press. The figure can fluctuate depending on the company’s actual earnings.

Update: The final approved dividend rate for Pag-IBIG MP2 savings is 6.00%. This was announced by PAG-IBIG Fund (HDMF) on its official Facebook page on March 12, 2022.

Final Pag-IBIG Regular and MP2 Savings Dividend Rates for 2021 Announced on March 12, 2022

Below is the Pag-IBIG dividend rate history from 2011 to 2020 taken from their official website.

Pag-IBIG MP2 Dividend Rates History from 2010 to 2020

Pag-IBIG MP2 versus Time Deposit vs. Regular Pag-IBIG Savings

Below is a comparison of time deposit interest, Pag-IBIG (required) regular savings dividends, and MP2 dividends.

As you can see, it constantly outperforms both time deposits and required savings.

The table below displays the average returns through 2019. Time deposit rates are determined on a BSP report, whereas Pag-IBIG rates are derived from its financial statements.

YearTime DepositRegular Pag-IBIGMP2

How Does Pag-IBIG Earn to Pay for Dividends?

Where do they put their money?

Pag-IBIG is actually a mutual fund in which people’s contributions are invested in a variety of assets. According to the law, 70% of the funds are used to finance home loans.

Other sources of revenue include short-term loans, sovereign securities (acquiring government obligations), time deposits, and corporate bonds.

How to be Eligible in Pag-IBIG MP2?

Anyone who actively contributes to the required savings plan is eligible. People who are no longer employed, such as former members with 24 monthly saves, have been granted exemptions as long as they have a source of monthly income.

What are the Benefits of Pag-IBIG MP2?

These are just a few of the many benefits of using MP2 as a source of passive income.

  • Earnings are not taxed.
  • It’s government-backed savings, making it suitable for conservative investors looking for a secure place to invest without risking their money.
  • There are no fees or charges, so the money you put in stays the same. It differs from mutual funds, which have a sales burden.
  • Members who are no longer actively working but nonetheless have a source of income are eligible.
  • Dividends have typically outperformed savings accounts, term deposits, and required savings accounts.
  • Dividends may be sent to your bank account or left in the account to increase compounded.
  • Contributions may be made in any amount. You may invest whatever you wish since it is voluntary savings: monthly, quarterly, or yearly. Unlike a variable universal life (VUL) insurance, you are not bound to a contract and must pay premiums on a regular basis.
  • Because of the low capital needed, you can get started even if you don’t have a lot of money.
  • You may put up as much as you want. This is ideal for individuals with a larger budget.
  • It’s simple to create an account since it’s the same as upgrading an existing membership.
  • It is also simple to pay. Contributions may be made at any bank or payment center that participates. Pag-ibig now accepts payments through the internet.
  • You have the option to withdraw at any moment. Terms and conditions apply.
  • This is a great way to save money for your medium-term financial objectives.
  • It may be an effective strategy to diversify your portfolio and control risk in your assets.
  • The website now allows you to create an online account.

What are the Disadvantages of Pag-IBIG MP2?

The following are the risks and disadvantages of investing in MP2:

  • The lock-in time has been set at 5 years.
  • There are no rollovers available. Your contributions would receive the same returns as the obligatory savings after 5 years. It would not earn anything two years later.
  • If you want to continue receiving the benefits after five years, you must register a new account.
  • Transactions may be cumbersome for people who do not have a Pag-ibig branch nearby.
  • When the returns from MP2 are lower than the earnings from alternative investment possibilities, there is an opportunity cost. Some mutual funds and UITF funds, for example, have claimed better returns.
  • If the account is closed before five years, individuals who choose to receive dividends at the end of five years will only be entitled to half of the payout. Meanwhile, individuals who choose to receive dividends each year will only be able to recoup their initial investment.

How can I enroll in Pag-IBIG MP2?

Visit any Pag-IBIG branch. Bring any acceptable identification, the needed initial payment, and the bank account to which dividends should be credited.

The online enrollment form is available for download. However, you must already be a member who has donated for at least 24 months and has been assigned a membership number.

There is also an online application available here.

How Much Should I Save for Pag-IBIG MP2?

You may begin for as little as ₱500, but the choice is entirely yours. You can put up more, maybe ₱1,000, if you wish.

Is there limit to how much I can invest with MP2?

There is no limit to how much you can invest. Keep in mind that larger sums may necessitate doing it in ways other than physically handing out cash. If the sum exceeds ₱500,000, you may be required to write a personal or manager’s check.

How Often Should I Save for Pag-IBIG MP2?

It is entirely up to you how regularly you would save for your MP2. If you wish, you can make recurring payments to the program, such as a monthly contribution. You could also do it only once. In either case, your savings may be eligible for yearly dividends.

When Can I Get Pa-IBIG MP2 Dividends?

Dividends can be received in two ways: compounded or yearly. When dividends are compounded, you must wait until the 5-year lock-in period expires. Dividends are paid out annually and are deposited directly into your bank account.

If you aren’t sure what’s best, read our article on how to maximize Pag-IBIG MP2 income.

Where can I pay my contributions for Pag-IBIG MP2?

Contributions might be withheld from your pay depending on your agreement with your employer. Pag-IBIG branch or any of the partner payment centers, which include 7-11 outlets, Bayad Centers, SM Business Centers, M. Lhuillier, and ECPay also MP2 contributions.

OFWs and persons living abroad may also remit money via international partners such as iRemit, PayPilipinas, Philippine National Bank (PNB), and Asia United Bank (AUB).

Can I open more than one MP2 savings account?

Yes. It’s okay to have several accounts. If you’re saving for many financial objectives and don’t want to mix your funds, this might be a good solution for you.

When can I withdraw my Pag-IBIG MP2 savings?

You may withdraw your funds at the end of the 5-year lock-in term. Certain circumstances, such as complete incapacity, medical-related job separation, unemployment due to company closure or retrenchment, retirement, major diseases, relocation abroad, sudden death, and so on, enable you to close it within 5 years.

There may be penalties if you close the account before the time ends for reasons not stated above. Compounded accounts are only entitled to half of the dividends, whereas yearly accounts are only entitled to their entire savings minus any dividends.

If I don’t withdraw my MP2 savings, what happens after 5 years?

If you retain your savings with Pag-IBIG after the lock-in period has expired, your account will no longer receive the same dividend and will instead earn the same as the necessary regular deposits. If no withdrawal is made after two years, it will no longer receive any profits.

If you want to continue receiving the dividends, you may establish a new MP2 account.

Read our article on how to get the most out of your Pag-IBIG MP2 savings.