Early MPF Withdrawal Heads for Year-End Public Consultation; Anna Wu: Cap at 50%

The MPFA is studying a compassionate withdrawal system letting members tap part of their MPF before retirement for critical illness or sudden family changes. Whether children’s education, home down payments or unemployment qualify goes to public consultation by year-end. MPFA chair Anna Wu was clear: withdrawals shouldn’t exceed 50%.

How would MPF early withdrawal work?

Critical illness and family upheavals qualify; education, property and joblessness still under debate. The working group’s review is done; it goes to the board in September, then to the government, with legislation needed after consultation. “I’m not too worried about abuse — it’s their own money,” Wu said. “But don’t drain all contributions in advance! We need to study whether the cap should be 20% or 30% in different situations.”

Will post-retirement withdrawals change?

Instalment options under study; the law needs clarifying. Whether retirees take lump sums or instalments remains legally murky — the MPFA wants clearer provisions. The market will also need suitable post-retirement products, including annuity offerings.

What about full liberalisation?

A central database is the prerequisite; offsetting is the obstacle. Semi-liberalisation is expected in 2012, with full liberalisation the long-term goal — letting employees move both their own and employers’ accruals to a chosen scheme. The MPFA is exploring a central database to pave the way. Wu was blunt that the offsetting mechanism, which lets employers offset severance and long-service payments against MPF contributions, blocks employees from moving the employer portion: “The MPFA’s position is that offsetting shouldn’t stand in the way of full liberalisation.”

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