Passive income through Pag-ibig MP2: How to start saving

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Do you know there’s a chance to earn passive income tax-free through Pag-ibig or the Home Development Mutual Fund (HDMF)? It’s called MP2 or modified Pag-ibig savings program. That’s why in the early 2019, I actually started my account. Read on and find out how you can begin yours too.

Pag-ibig MP2

Every employee has to have a contribution to Pag-ibig regular savings. It is mandatory. Whatever you’ve put in becomes the basis on how much you can loan when you’re planning to build a house or purchase real estate. It does earn some dividends.

If you want higher dividends, MP2 is what might suit you. It is purely voluntary, so actually you have to open it on top of your regular savings.

How much dividends can I earn?

Dividend rate is usually declared in March of each year. It’s published on the website and announced in the news along with the company’s financial reports. The amount can vary depending on its actual income.

Related: How to make the most out of your Pag-IBIG MP2 earnings
Four Pag-ibig MP2 strategies you need to know

Latest MP2 dividends

In March of 2019, Pag-IBIG announced its latest MP2 dividend for the previous year at 7.41%. It’s about 8.63% lower than in 2017. See below the rest of the dividends since 2010.

YearMP2 dividend rate

Compare time deposit vs. regular Pag-ibig vs. MP2

Time deposit rates, Pag-ibig regular savings and MP2 dividends from 2010 until 2018

Here’s the comparison between time deposit interest, Pag-ibig (mandatory) regular savings dividends and MP2 dividends since 2010. As you can see, it actually beats both time deposit and mandatory savings consistently every year. The table below shows the average returns until 2018.

Time deposit2.15%

How do Pag-ibig earn?

Where do they invest? Actually, Pag-ibig is a mutual fund where people’s contributions are invested in many assets. According to the law, 70% are into financing housing loans. Other sources of income are from its short term loans, sovereign securities (acquiring debts from the government), time deposits, and bonds from companies.

Are you eligible?

Anyone who is actively contributing to the mandatory savings is qualified. Exemptions have been granted to people who are no longer employed such as those who are former members with 24 monthly savings as long as they have a source of monthly income.

Benefits of Pag-ibig MP2?

These are the many advantages when you begin MP2 as source of passive income.

  • Earnings are tax-free.
  • It is guaranteed savings backed up by the government, so it’s ideal for conservative investors who want to have a safe place to invest and without capital loss.
  • There are no fees and charges, so your invested amount remains intact.
  • Eligible members include those who are no longer actively employed but are still earning an income.
  • Dividends are historically higher than a savings account, time deposit, and the mandatory savings.
  • Dividends can be released to your bank or remain in the account to earn compounded growth.
  • Contributions are flexible in the way in which it allows one-time or monthly investments.
  • The small capital requirement means that you can start even when you don’t have that much money.
  • There is no limit on how much you put up. This is perfect for those who have more to invest.
  • Account opening is easy as it’s like updating existing membership.
  • To pay is also convenient. Contributions are accepted at any branch or participating payment centers.
  • You can withdraw any time. Terms apply.
  • This is ideal savings vehicle for medium-term financial goals.


  • Lock-in period is set at 5 years.
  • Full dividends may not be released should withdrawal occur within the lock-in period.
  • No rollovers are available. After 5 years, your contributions would earn the same returns as the mandatory savings. Two years later, it would not earn anything.
  • If you wish to continue getting the benefits beyond five years, opening a new account is required.
  • Doing transactions may be inconvenient for those without any Pag-ibig branches nearby.
  • As of the moment, no online access is given. If you wish to get to know what’s happening on the account, you need to visit the branch or send an email.

How can I enroll with MP2?

Drop by any Pag-ibig branch. Bring any valid identification card, the required initial amount, and bank account where you want dividends to be credited. You can actually download the online enrollment form. Make sure though that you are already a member and have been issued a membership number.

There’s also an online application here.

How much should I save?

You can start for as low as ₱500, but it’s really up to you. If you want to put up more, like maybe ₱1,000, you can.

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

You can go as high as you want. There is actually no limit on how much you can invest. Bear in mind that higher amounts may mean that you need do it in ways other than personally handing in cash. If the amount is at least half a million, you may need to issue a check.

How much can I expect to earn?

Below, you will see an estimate of how much your money would grow when saving for the next five years. There are two results showing ₱500 and ₱1,000 monthly. The rate that’s being used is the average dividend rate since 2014. The rates in the past do not guarantee future returns.

Here’s a great article to read on how to make the most out of Pag-ibig MP2 earnings.

1 6,000 6,219 12,000.00 12,437.09
2 12,000 12,860 24,000.00 25,719.01
3 18,000 19,952 36,000.00 39,903.13
4 24,000 27,525 48,000.00 55,050.74
5 30,000 35,614 60,000.00 71,227.28

How often should I save?

It’s your choice how frequently you’d save for your MP2. The program accepts regular payment such as a monthly contribution that is if you prefer so. You may also opt to do it one-time. Either way, your savings can be eligible to receive the yearly dividends.

Where can I get my dividends?

There are two ways in getting your dividends: compounded or annually. In compounded, you wait until the lock-in period of 5 years. In annually, you get the dividends each year straight to your bank account.

Where can I pay my contributions?

Contributions can be deducted from your salary subject to your arrangement with employer. They may be accepted at any Pag-ibig branches or any of the participating payment centers: 7-11 stores, Bayad Centers, SM Business Centers, M. Lhuillier, and ECPay.

For OFWs and people who are located abroad, you can also remit through international partners such sa iRemit, via PayPilipinas, Philippine National Bank (PNB) and Asia United Bank (AUB).

For a more complete and updated list, you may check this online resource.

Can I open more than one MP2 savings account?

Yes. Multiple accounts are permitted. It might be an option for you if you’re saving for different financial goals, and you don’t want to mix up your funds for each of them.

When can I withdraw my money?

You may withdraw your money at the end of the lock-in period, which is 5 years. Certain situations allow you to close it within 5 years such as total disability, medical-related work separation, unemployment due to business closure or retrenchment, retirement, serious illnesses, migration abroad, unexpected demise, etc.

Should you close the account before the period on grounds not covered above, there’s going to be consequences. For compounded accounts, you’re only entitled to 50% of the dividends and those in annual accounts will only get their total savings minus all dividends.

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

If you keep your savings with Pag-ibig beyond the lock-in period, they will no longer earn the same dividend and instead will revert to the same earnings as the mandatory regular savings. After two years, if no withdrawal is done, they don’t earn any gains anymore.

Should you wish to continue enjoying the benefits, you can open a new MP2 account again.