Have you ever wondered about how much your money could grow with the Pag-IBIG MP2 program? I bet you're thinking now! In this post, let's break down how exactly MP2 dividend computation works. Also, I'll show you the potential boost to your savings over five years.
Spoiler alert: It’s more exciting than you might think!
Curious to see the numbers? Let’s go!
MP2 Dividend Computation
Previously, we've discussed how to claim your MP2 savings and dividends. However, it's important to know how is MP2 dividend computed or calculated in Pag-IBIG. How does your money earn interest with Pag-IBIG MP2?
With that, we’re going to tackle it and give you sample computations of how much you can get with your MP2 savings and dividends.
Before diving into numbers that you might be eager to see, there are four (4) payment schemes available for those enrolled in the MP2 program. Understanding these schemes will help you choose which will give a higher payout.
The four (4) payment schemes are as follows:
Monthly savings with annual dividend payout
Monthly compounded savings with end-year dividend payout
One-time payment with annual dividend payout
One-time payment with compounded end-year dividend payout
End-year dividend payout covers the 5-year saving period, meaning dividends earned per year will be added to the annual accumulated value for the succeeding year. If you choose the annual payout, you can withdraw the dividends at the end of each year and it will not be added to the accumulated value for the next years.
MP2 Monthly Savings with Annual Dividend Payout
Computing your dividend may seem a bit intimidating and overwhelming but I suggest to be patient and have a pen, paper, calculator, or your excel sheets ready. I have tried several times to fully understand how it is done. I even watched and read several articles about this. What I know is that when I did the computations, it gave me a sense of accomplishment and a clearer view of how MP2 dividend computation works.
So, here it goes!
We will be using the dividend rate of 7% (a little bit lower than the dividend rate for last year which is 7.05%) in the sample computations. Take note that this varies from year to year and is computed by Pag-IBIG Fund based on its annual performance.
Assuming also that we pay the minimum contribution of Php 500 per month, below table shows the dividend amount for each year of the 5-year saving period.
For this demonstration, we’ll be using the following terms:
AAMS- Average Accumulated Monthly Savings
DR- Dividend Rate
DA- Dividend Amount
TAV- Total Accumulated Value
*amount is rounded off to the nearest two decimal place
MONTH | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | YEAR 5 |
Jan | 500 | 6,500 | 12,500 | 18,500 | 24,500 |
Feb | 1,000 | 7,000 | 13,000 | 19,000 | 25,000 |
Mar | 1,500 | 7,500 | 13,500 | 19,500 | 25,500 |
Apr | 2,000 | 8,000 | 14,000 | 20,000 | 26,000 |
May | 2,500 | 8,500 | 14,500 | 20,500 | 26,500 |
Jun | 3,000 | 9,000 | 15,000 | 21,000 | 27,000 |
Jul | 3,500 | 9,500 | 15,500 | 21,500 | 27,500 |
Aug | 4,000 | 10,000 | 16,000 | 22,000 | 28,000 |
Sep | 4,500 | 10,500 | 16,500 | 22,500 | 28.500 |
Oct | 5,000 | 11,000 | 17,000 | 23,000 | 29,000 |
Nov | 5,500 | 11,500 | 17,500 | 23,500 | 29,500 |
Dec | 6,000 | 12,000 | 18,000 | 24,000 | 30,000 |
TOTAL | 39,000 | 111,000 | 183,000 | 255,000 | 327,000 |
AVERAGE (AAMS) | 3,250 | 9,250 | 15,250 | 21,250 | 27,250 |
DIVIDEND AMOUNT (DA) | 227.50 | 647.50 | 1,067.50 | 1,487.50 | 1,907.50 |
Before computing the dividend amount, we must first determine the average accumulated monthly savings (AAMS) and then divide it by 12. This is done because not everyone will be depositing the same amount per month.
For this example, the average accumulated monthly is computed as:
Php 39,000/12 = Php 3,250
The dividend is computed by multiplying the AAMS by the current rate (7.0% converted to decimal or 7.0/100 =0.07).
So we get the following:
Php 3,250 x 0.07 = Php 227.50
For the succeeding years, we use the same formula: DA = AAMS x DR
Year 2: 9,250 x 0.07 = 647.50
Year 3: 15,250 x 0.07 = 1,067.50
Year 4: 21,250 x 0.07 = 1,487.50
Year 5: 27,250 x 0.07 = 1,907.50
If you opt to receive your dividend yearly, the DA will be credited to your bank account at the end of each year.
By the end of your 5-year saving period, you have accumulated a total dividend of Php 5,337.50 or 17.79% gain on your capital. Not bad, huh?
MP2 Monthly Compounded Savings with End-Year Dividend Payout
Now let’s try another computation using the compounded formula as the table below illustrates the figures.
MONTH | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | YEAR 5 |
Jan | 500 | 6,727.50 | 13,390.92 | 20,520.80 | 28,149.70 |
Feb | 1,000 | 7,227.50 | 13,890.92 | 21,020.80 | 28,649.70 |
Mar | 1,500 | 7,727.50 | 14,390.92 | 21,520.80 | 29,149.70 |
Apr | 2,000 | 8,227.50 | 14,890.92 | 22,020.80 | 29,649.70 |
May | 2,500 | 8,727.50 | 15,390.92 | 22,520.80 | 30,149.70 |
Jun | 3,000 | 9,227.50 | 15,890.92 | 23,020.80 | 30,649.70 |
Jul | 3,500 | 9,727.50 | 16,390.92 | 23,520.80 | 31,149.70 |
Aug | 4,000 | 10,227.50 | 16,890.92 | 24,020.80 | 31,649.70 |
Sep | 4,500 | 10,727.50 | 17,390.92 | 24,520.80 | 32,149.70 |
Oct | 5,000 | 11,227.50 | 17,890.92 | 25,020.80 | 32,649.70 |
Nov | 5,500 | 11,727.50 | 18,390.92 | 25,520.80 | 33,149.70 |
Dec | 6,000 | 12,227.50 | 18,890.92 | 26,020.80 | 33,649.70 |
TOTAL | 39,000 | 113,730 | 193,691.04 | 279,249.60 | 370,796.88 |
AVERAGE (AAMS) | 3,250 | 9,477.50 | 16,140.90 | 23,270.80 | 30,899.74 |
DIVIDEND AMOUNT (DA) | 227.50 | 663.42 | 1,129.90 | 1,628.95 | 2,162.98 |
Like our first example, we need to determine the average accumulated monthly savings before computing the dividend. As you can see the first year's dividend computation is the same as in the computation table for monthly savings. The difference here in the monthly compounded is that the dividend amount gained from the previous year is now added to the monthly contribution.
Hence, your contribution for January of Year 2 is computed as:
Php 6,000 + 500 + 227.50 = Php 6,727.50
For year 2 dividend, we use the same formula: DA = AAMS x DR
Php 9,477.50 x 0.07 = Php 663.42
Again for the start of years 3 to 5, we are going to add the dividend value gained at the end of the year to the monthly contribution, get the AAMS, and multiply it by the current dividend rate to get your dividend amount.
Notice how at the end of the 5-year saving period, the total dividend amount for the compounded savings is higher than the first payment scheme at 5,812.72 (19.38%) vs 5,337.50 (17.79%). This is the advantage of allowing your annual dividend to be added to your savings instead of withdrawing it yearly.
MP2 One-Time Payment with Annual Dividend Payout
For this payment scheme, let’s say you wish to deposit 100,000 in one go. Let's see the table shown below and it will show you the dividend amount you will be receiving each year.
Year | Monthly Savings | Accumulated MS | Cumulative Savings | Annual Dividend | Total Accumulated Value |
1 | 100,000 | 100,000 | 100,000 | 7,000 | 100,000 |
2 | 0 | 0 | 100,000 | 7,000 | 100,000 |
3 | 0 | 0 | 100,000 | 7,000 | 100,000 |
4 | 0 | 0 | 100,000 | 7,000 | 100,000 |
5 | 0 | 0 | 100,000 | 7,000 | 100,000 |
Total | 100,000 | 35,000 |
This is the easiest to compute by using the formula in our first example.
DA = AAMS x DR
Php 100,000 x 0.07 = Php 7,000
At the end of each year, you’ll be receiving 7,000 as a dividend for your savings and you can withdraw this amount. But if you don't want to withdraw, the dividend amount will not be added to the capital in the computation of the succeeding year's dividend. This is equivalent to a total of 35% growth from your capital at the end of your 5-year savings period.
MP2 One-time Payment with Compounded End-Year Dividend Payout
Using the same amount of 100,000 as capital, we will use the formula: FV=PV(1 + r)t
Where FV = future value
PV = present value
r = interest rate per year
t = time or in this case number of years
So, FV= Php 100,000 (1 + 7%) 5 is equal to Php 140,255.17
Let’s use a table for a clearer view of your compounded dividend savings.
Year | Monthly Savings | Accumulated MS | Cumulative Savings | Annual Dividend | Total Accumulated Value |
1 | 100,000 | 100,000 | 100,000 | 7,000 | 107,000 |
2 | 0 | 0 | 107,000 | 7,490 | 114,490 |
3 | 0 | 0 | 114,490 | 8,014.30 | 122,504.30 |
4 | 0 | 0 | 122,504.3 | 8,575.30 | 131,079.60 |
5 | 0 | 0 | 131,079.60 | 9,175.57 | 140,255.17 |
Total | 100,000 | 40,255 |
At the end of your 5-year saving period, your capital has grown by 40.25%.
Final Thoughts on MP2 Dividend Computation
Now that we've walked through the four different payment schemes of MP2 dividend computation, I hope you're feeling more confident about which one suits you best! Each option has its advantages depending on your financial situation and goals. For example, if you have some extra cash saved up or can manage to set aside a larger lump sum, the one-time payout with compounded interest might be the best way to supercharge your savings. By making that initial big investment, you allow your money to grow faster, thanks to the magic of compounding.
On the other hand, if your budget is more suited to smaller, steady contributions, a monthly savings plan might be the better fit. You don’t need to worry about missing out on compounded interest here either—you can still reap the benefits by choosing the year-end payout option. This way, even though you’re saving smaller amounts over time, the interest will accumulate and give your savings that extra boost.
Ultimately, it's all about finding the balance between what works for your current financial situation and what will help your money grow the most efficiently. Whether you go for a larger one-time investment or opt for more manageable monthly contributions, you’re still putting yourself on the path to smarter savings. The key is to stay consistent and choose the plan that aligns with your goals and lifestyle. After all, the goal is to make your money work as hard for you as you’ve worked for it!
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