“A money invested early generates its own earnings over time.” – Anonymous
THE Pag-IBIG Fund recently released its fund performance for 2025. Last year’s result was a historic performance with a record high of P64.34 billion in total dividends — the largest in its 45-year history. This caused dividends to rise to 6.62 percent for regular savings and 7.12 percent for MP2 savings. The MP2’s rate of 7.12 percent was the highest declared rate post-pandemic. Hopefully, it will reach the pre-pandemic 7.23-percent level in 2019.
I am entering my third year as an MP2 investor, and I am happy with the way my investment is growing, considering the current market condition in our country. Just for two years, my investment grew by 20 percent due to the power of compounding interest. Instead of withdrawing my dividend annually, I keep it invested so the dividend, together with the principal amount, will continue to earn interest for me. What makes this even better is, because MP2 is a government-backed program, my principal is protected and guaranteed. In the remote possibility that the fund will not earn any dividends for a given year, MP2 investors have the assurance that their principal investment (plus earned dividends in previous years) remains intact.
As I am satisfied with my fund performance, I am now doing the laddering technique. Laddering in Pag-IBIG MP2 means opening a new, separate MP2 account every year for five years. The principal amount varies but this strategy will ensure that starting from the sixth year, I will have a five-year investment maturing annually, in the next five years. As a retiree, this is a good source of passive income for me, high interest and tax-free.
Now, if you don’t want to create another account but want to stay invested in MP2 after your existing account matures, Pag-IBIG recently offered its investors an option of one-time rollover for another five years. Instead of withdrawing the funds immediately upon maturity (after five years), you now have the option to stay invested and continue to earn higher, tax-free dividends, effectively creating a new five-year locked period. Now, if you are one of those who chose to leave the dividends to earn compounding interest, you can just imagine the growth of your money in 10 years. However, this one-time rollover offer will not allow you to change your initially chosen pay-out option. Meaning, if you initially opted for an annual dividend payout, that remains to be your payout option during the rollover. You can no longer switch and have your dividends paid out after five years.
If you have more resources to invest, Pag-IBIG has also increased the maximum savings amount to P20 million. The P20 million can be a one-time placement or an accumulation of your several MP2 accounts. I recently learned that because of MP2’s track record, more “moneyed” people are participating in the program. This is an indication of the level of confidence the MP2 program is getting from the general public. For Pag-IBIG, this increasing public awareness and confidence should challenge and inspire them to do better in managing their fund performance. With the low trust rating the current government and most of its agencies are getting, Pag-IBIG is considered to be the silver lining. They just need to stay the course.
While more financially endowed Filipinos are getting into the MP2 program, I still believe that the biggest beneficiary of the MP2 program are the ordinary Juans and Pedros who do not have access and cannot participate in big-ticket investment instruments. They do not need a big amount to get into MP2. They can start with a P500 monthly contribution (just add and increase as they are able), and they can already enjoy a capital-protected, high interest-earning and tax-free savings program.
Pag-IBIG should be doing more MP2 infomercials while private companies and government institutions should include discussions of the program during employee orientation to create greater awareness. It’s a good thing that there are now many vlogs and podcasts covering this topic. Most of the time, people just need to know or be told in order to take action. It took me three rounds of discussions before I finally decided to go to the nearest Pag-IBIG office and made my initial placement. And now I am enjoying its rewards. If I had done it sooner, it would have been better!
We want to create more financially prepared Filipinos? Then MP2 is a good way to start them with.
