Hong Kong retirement savings gap widens to HK$1.4m, Fidelity survey finds

This article is a rewrite of a report from July 2012.

A Fidelity retirement survey published in 2012 found the gap between what Hongkongers needed for retirement and what they had actually saved had widened from HK$1 million two years earlier to HK$1.4 million, pushing the “retirement readiness index” down from 54.2 per cent in 2010 to 50.2 per cent. The survey polled 857 residents aged 25 to 65 in April–May 2012.

How unprepared were Hongkongers for retirement?

Forty per cent of respondents expected to keep working after retiring at 65, and 48 per cent felt their retirement savings would not cover their living costs. To bridge the gap, three-quarters said they would work after retirement and about 28 per cent would consider delaying retirement.

A Fidelity Hong Kong executive attributed the falling index to two factors: market volatility pushing people into conservative strategies with lower future returns, and losses on higher-risk investments shrinking future income. Respondents widely blamed inflation and falling share prices for eroding their post-retirement income.

Why did so few understand MPF semi-portability?

Three-quarters of respondents admitted they did not understand the details of the MPF “semi-portability” scheme due to launch in November 2012 — with men and high earners the least informed. A third said they would switch providers once it took effect, but worried they lacked enough information to compare fund managers and products; 41 per cent said they relied on the internet, family and friends for information.

The executive argued that waiting until 40 to start saving for retirement was far too late, and suggested adding financial literacy to school curricula. On raising mandatory contribution rates, he called the idea controversial and favoured tax incentives to encourage MPF voluntary contributions first.

To prepare for semi-portability, Fidelity had been running seminars, updating MPF information online frequently, launching a mobile app and hiring more frontline customer service staff. The executive expected a possible industry price war after the launch, though its scale remained to be seen.