All you need to know about Pag-IBIG's MP2 (6 Things) and is it good for you? | Philippines

All you need to know about Pag-IBIG's MP2 (6 Things) and is it good for you?


A lot of you probably encountered people talking about the MP2 program of Pag-IBIG fund. But what is it really? Here are the things that you need to know about Pag-IBIG’s MP2 program. 

 

As a financial coach here in the Philippines I try to learn all the possible things that can be of help with my client so I list down all I know about MP2 to help you decide if it’s your cup of tea.

 

5-YEAR MATURITY PERIOD

 

In short, it is not liquid and has a holding period of 5 years. We don’t advise this as a safekeep wallet for your emergency funds but if you have spare money to save MP2 has a better return compared to a savings account. Typical savings account will give you a 0.10%-0.25% per year but it will be convenient for you when you need it because of its liquidity.

 

Once you already have an account, you’ll be able to get it after 5 years so for this you need to be consistent in setting aside at least Php 500 monthly in the next 5 years.

 

DIFFERENT DIVIDEND RATES

 

As mentioned above, MP2 has a bigger return rate but its dividend rate varies yearly. Although it is not fixed, you can see that as per historic records the interest rates just keep on getting high, although the yield last year was at the lowest for the past 4 years but it was due to the effect of the pandemic.

 

YEAR

MP2 SAVINGS DIVIDEND RATE

2020

6.12%

2019

7.23%

2018

7.41%

2017

8.11%

2016

7.43%

2015

5.34%

2014

4.69%

2013

4.58%

2012

4.67%

2011

4.63%

 

It is also great to know that the earning is compounding, meaning that the interest you get will be added to the capital and will be subjected to interest in the future. 

 

LOWER-RISK INVESTMENT

 

This is a type of investment that has a lower risk compared to other types of investment. And since it has a lower risk, its main goal is to keep your capital intact. Lower risk means lower reward so if you want to get a higher reward you might want to pursue higher risk investments, but only if you are willing to risk an amount of money for a higher potential gain.

MP2 is a great choice for beginner investors that don’t want to risk that much and have a spare of money that you won’t be needing in the next 5 years.

 

EVERYTHING CAN BE DONE ONLINE

 

What I love about this is you can do everything online! Most of us are working individuals who are tied with their work and even business so the fact that you can do everything online regardless of where and when is a great thing.

 

From application, payment, and monitoring, you can do all those things in the Pag-IBIG website- http://www.pagibigfund.gov.ph/.

 

MP2 IS TAX-FREE

 

One of the factors why investors choose this is because it is tax-free. So after 5 years you can get all the earnings you were able to save, capital plus earnings, without withholding taxes.

 

Savings account, whatever banking institution, is subjected to a 20% withholding tax here in the Philippines.

 

Maturity period of the MP2 program is 5 years, after that period you have the choice to get all your earnings for consumption or re-apply to the program.

 

EASE OF PAYMENT

 

You can pay your MP2 in two different ways, voluntary or through salary cut.

 

If you choose to pay voluntarily, you can pay  via participating payment centers such as GCash, 7-11, Bayad Centers, ECPay or M. Lhuiller.

 

Some banks also offer bill payments, just check with your banking institution or look for bills payment in their banking apps.

 

If you want a more hassle-free transaction you can pay your MP2 contribution through salary deduction, just go ask your HR or payroll unit for your company’s process.

 

-Teresa Gueco is a content writer and also writes about minimalism, low-waste living (www.shesaidgoforit.com) She's a financial coach and envisions every Filipino to be financial independent.

 

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