Towers Watson: How effective do you think the MPF is at preparing people financially for retirement?

五月 4, 2011
Joe Chan

One of the concerns on MPF is whether the contributions made are sufficient to meet MPF members’ needs. Can MPF members rely solely on the MPF to support their retirement life? Let’s hear the market players’ suggestions:-



Stanley Yip, CEO, “According to the MPFA, the average MPF account balance has reached $125,000. Although the amount is insufficient for retirement, it has helped to raise the awareness of MPF members on retirement planning. Members may participate in voluntary contributions to increase the retirement savings. To many people, MPF is their sole retirement savings. Although the MPF account balance may not be enough for retirement, it plays an important part to a certain extent.”


Elvin Yu, Head of Business, Hong Kong and China, “In many ways, the Mandatory Provident Fund system has achieved its original objectives in that it provides community-wide retirement benefits and thus raises the awareness in retirement planning. This has also helped encourage voluntary contributions and additional personal savings.”


Kelvin Lee, Head of Institutional Business, “Athough that there have been some arguments on the contribution amount being not sufficient enough, the MPF scheme has provided members with a cost-effective platform to invest their money with. Members can also adjust the voluntary contributions to meet their long term target.”


Desmond Ng, Chief Operating Officer, Asia ex Japan, “Before the implementation of the MPF System, only about one-third of the Hong Kong workforce had some form of retirement protection. With the MPF System put in place, around 87% of the total employed population is now covered under MPF schemes, ORSO schemes, statutory pensions or provident funds. As of the end of December, the total net asset value of all MPF schemes is over HK$345.7 billion (421 constituent funds).

Besides, the funds also offer decent returns, giving people the first layer of retirement protection. Amongst them all, the Asia Pacific ex Japan equity category was the top performer, generating a 168% of return over the 10-year period. (Source: Lipper)

Hong Kong has been better off with the MPF scheme since 2000. People are more aware of the importance of long-term retirement investment; they are now more active in retirement investing and eager to learn more about retirement planning.”


Bonnie Tse, Senior Vice President and Managing Director, “MPF is designed for serving the fundamental needs of people’s retirement life. The 5% mandatory contribution is a good basis to start off, but it may not be adequate to support a comfortable retirement. To have a better planning for retirement life, members are strongly advised to make additional savings such as voluntary contributions to the MPF scheme. There are plans in the market which allow flexible monthly voluntary contributions as low as HK$300. Members can consider to supplement the mandatory contributions by making additional voluntary contributions.”


Alan Tsang, CEO, “過去五年,強積金的平均升幅達29%(每年升幅5.2%),最高更達65%(每年升幅10.5%),作為退休儲備其中一種已相當不錯。”


Benjamin Li, Chief of Pension and Broker Channel, “MPF definitely serves as a good starter in longterm retirement preparation. But as we continue to battle longevity, its statutory contribution is not sufficient to cover all the needs upon retirement.

People may top up their mandatory contribution to increase their retirement reserve.

Other than that, AXA provides a wide range of protection and wealth management tools to help people prepare for their retirement.

People should not overlook the importance of life and health protection. The medical costs increase with the advance of technology; meanwhile, more critical illnesses become curable. When we prepare for retirement, not only should we focus on wealth accumulation, but also be wise to purchase adequate life and health protection.

The post-retirement planning is even more challenging as we live longer. Assuming the average life expectancy in Hong Kong is 82, that means we have to reserve a sum of savings which is adequate to support our expenses for 17 years if we plan to get retired at the age of 65. As the entire amount of accrued benefit will be released to the member by the time they are qualified, we suggest the members to invest that amount in lowrisk savings product, such as annuity. They can then keep the ball rolling and hedge against the inflation.”


Patrick Li, Chief Executive, “An MPF scheme is a long-term investment that ensures some level of protection. The system is a first step towards preparing for retirement. However, it should not be the only step that is taken. Personal savings and investments are also important factors in providing for one’s future. It is an effective tactic for developing people’s savings habit as well as setting aside part of their monthly income for the retirement life. This could be further achieved by making more voluntary contributions. On the one hand, members would benefit from the compound effect and dollar cost averaging effect so that the risks would be lowered.”

China Life

Thomas Tam, General Manager, “The MPF scheme has been implemented for more than 10 years, is the MPF fund enough to support the retirement life? For those people who will retire before 2020, it can be said for sure that the fund is not enough to cover the retirement expenses.”


Wilsome Chow, CEO, “It is effective in the sense of getting people aware of the importance of retirement planning. The MPF contributions, as part of an integrated financial planning for retirement preparation, will help people prepare for a better future financially.”

Sun Life Financial

Billy Wong, Vice President, “I think MPF is effective in the sense that the enforcement rate is very high. Of course, there could be always some room for improving effectiveness.”


This article is not intended to provide investment advice. Action should not be taken on the basis of any opinion, view or statement contained in this article without seeking specific advice. Towers Watson neither endorse nor are responsible for the accuracy or reliability of any opinion, view or statement made in this article, and under no circumstances will Towers Watson be liable for any loss or damage caused by any reliance thereof.