Four Pag-ibig MP2 strategies you need to know

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In a separate article on Pagibig-MP2, a discussion on the many benefits of the program included its tax-free income, guaranteed capital, dividend options, and small starting capital for as low as P500.

In a separate article, I’ve discussed how you can make the most out of your Pag-ibig MP2 earnings so that your net benefits can be maximized. You can check it out and then come back here.

Here, the discussion is extended to include MP2 strategies. Included too are situations where they might be appropriate to be used.

Strategy 1: Compounded MP2

Do you have any medium-term financial goals?

A medium-term goal is to be fulfilled in three to five years. It may require an amount that you may not be able to put up presently, and by postponing it later in the future would give you more time to save up. These goals can be any of the following:

Related: Passive income through Pag-ibig MP2: How to start saving
How to make the most of Pag-ibig MP2 earnings

  • Important milestones such as weddings, anniversaries, reunions, etc.
  • Leisure such as vacations abroad
  • Purchase or down-payment for a property or vehicle
  • Capital for a business or franchise
  • Child education
  • Professional development like taking student exchange or post-graduate studies

Any number of investment options are suitable for these goals such as bonds, money market, time deposit products, savings account, long term negotiable certificate of deposit and balanced funds.

You might have to think twice going into the more aggressive equities and index funds because of the relatively short length of time. Experts recommend that equities require at least a decade to ride through the ups and downs of the stock market.

Pag-ibig MP2 is particularly suited for these goals too because its maturity is 5 years. If you let the dividends compound at the end of the maturity, the more that you get out of your savings.

How the compounded MP2 strategy works

  • Save monthly, yearly or one-time.
  • Let the savings stay in MP2 to mature.
  • Withdraw at the end of the 5-years.
  • Reap the benefits of compound interest!

See below a table showing estimated growth of P500 and P1,000 monthly savings, respectively.

MP2 savings estimate of P500 monthly. Credit: Pag-ibig.
MP2 savings estimate of P1,000 monthly. Credit Pagibig.

Strategy 2: Dividend pay-out

But what if you need to withdraw the dividend at the end of each year? There are a couple of situations where you might need an extra annual income.

  • Expenses for yearly trips
  • Payment for annual fees such as club membership, homeowners association, etc.
  • End-of-the-year purchases such as gifts, house decoration and repairs, etc.
  • Birthdays and other family celebrations
  • Donation to charity, church, etc.

This is where the dividend pay-out strategy comes in. Pag-ibig allows you to receive your dividends either at the end of 5 years or each year. This flexibility allows you to be able to enjoy your earnings as they are credited to your account.

How the dividend pay-out works?

  • Start your MP2 savings.
  • When opening the account, indicate that you’d like to get your dividend yearly.
  • Enroll a bank account to where your dividend will be credited.
  • Receive your annual dividend.
  • Withdraw your capital upon maturity.
  • Or you can rinse and repeat.

See below a sample annual dividend pay-out for a one-time savings of P1 million.

Dividends from one-time P1 million savings. Credit: Pag-ibig.

Strategy 3: Tiered MP2

As you can see from the table above, you can actually get the dividends per year. However, there are situations where you might want bigger returns than what the dividends can offer such as:

  • child education
  • tuition and matriculation fees for your post-graduate or professional education
  • mortgage and other big expenses

The tiered MP2 strategy makes use of the fact that you are allowed to open multiple MP2 savings account.

How the tiered MP2 strategy works

  • Open one MP2 savings account each year for the next four (or more) years.
  • Start saving P500 monthly on the first year, P1,000 monthly on the second year, P1,500 on the third year, and so on.
  • On Year 5, you can withdraw the first MP2 savings.
  • On Year 6, you can withdraw the second MP2 savings, and so on…
  • You can also do yearly or one-time savings.

See below a sample estimate of your earnings and income starting Year 5 and so on if you save at least P500 monthly. (Estimates from the next two tables are derived from the Pag-ibig published forecast.)

YearYearly savings1st MP22nd MP23rd MP24th MP2
16,000 6,243.75
212,000 12,955.78 6,243.75
318,000 20,171.21 12,955.78 6,243.75
424,000 27,927.81 20,171.21 12,955.78 6,243.75
524,000 36,266.14 27,927.81 20,171.21 12,955.78
618,000 36,266.14 27,927.81 20,171.21
712,000 36,266.14 27,927.81
86,000 36,266.14
Total120,000 36,266.14 36,266.14 36,266.14 36,266.14

If you add all earnings up starting Year 5, it’d be P145,064.56. And this table shows growth of your funds if you save P1,000 monthly.

YearSavings1st MP22nd MP23rd MP24th MP2
112,000 12,487.50
224,000 25,911.56 12,487.50
336,000 40,342.43 25,911.56 12,487.50
448,000 55,855.61 40,342.43 25,911.56 12,487.50
548,000 72,532.28 55,855.61 40,342.43 25,911.56
636,000 72,532.28 55,855.61 40,342.43
724,000 72,532.28 55,855.61
812,000 72,532.28
Total240,000 72,532.28 72,532.28 72,532.28 72,532.28

If you add all the earnings from MP2, you get P290,192.12.

Disadvantage of tiered MP2 strategy

One possible disadvantage of the tiered MP2 strategy is the fact that you would need to increase your savings by twice the amount each succeeding year. The relief begins on Year 5 as you would have one less account to save up for.

Strategy 4: MP2 rollover

Can Pag-ibig MP2 be used for long-term investing? Apparently, yes.

Before discussing about the strategy it is worth repeating two things. One, MP2 matures at the end of 5 years. Two, if you don’t withdraw your money, the dividend you’re going to get would be the same as Pag-ibig mandatory savings, which is relatively lower than what MP2 is offering.

So with the MP2 rollover strategy, the goal is to keep your savings in the program and let it grow as long as you want. One of the benefits of this strategy is the potential for compound earnings longer than 5 years.

How MP2 rollover strategy works

  • Open an MP2 account.
  • Save monthly, yearly or one-time.
  • At the end of 5 years, withdraw your money.
  • Open another MP2 account.
  • Put your savings back to the new MP2 account.
  • Rinse and repeat.

The only downside is that there are reports it might take quite a while before you can get back your money, some lasting for months. For the time being that you’re unable to withdraw, that can be a missed opportunity of earning passive income for your savings.

Also, some people might find it inconvenient to keep closing and opening accounts every five years. To date, an option for automatic rollover is not yet available to the investing public.


  • There are four MP2 strategies: compounding, annual dividend pay-out, tiered MP2 and MP2 rollover.
  • Choose to pick the strategy that best suits your financial goal.
  • MP2 has maturity of 5 years, making them suitable for medium-term goals and reap the benefit of compound interest.
  • In annual dividend pay-out, you can withdraw the dividend each year for extra income.
  • In tiered MP2 strategy, you may open and save up for one MP2 account each for the next four (or more) years. You then withdraw from each account upon maturity starting on Year 5.
  • In MP2 rollover, you can keep your savings for as long as you want by closing an account upon maturity and transferring them over to a new one.

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2 thoughts on “Four Pag-ibig MP2 strategies you need to know”

  1. Hi Emelito,

    Thank you for sharing the above information. It’s a great help for those who just started on their Pag-Ibig MP2. However, I would like to know your opinion on tiered MP2 and MP2 rollover, which is better of the two?

    Thanks in advance!

    1. Hi Joy, thank you for dropping by. I would say go with a strategy that fits your situation. Tiered MP2 means that you would need to open a new account every year, so it might be good if your financial goal occurs some time in the future and requires money for several years. An example is college tuition for a child. You’re redeeming one MP2 savings for each year to pay for the school fees.

      The MP2 rollover is extending the program long-term. Because MP2 has lock-in period of five years and does not automatically renew, then you may wait at the end of 5 years, close the account, open a new one, and reinvest everything back to the new account. Goals such as retirement or acquiring real estate assets may come to mind.

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