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.
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