Mercer warns Hong Kong MPF policy needs urgent overhaul: a lump sum at 65 may not be enough

The MPF withdrawal age is 65 — but consultancy group Mercer has warned that retirement adequacy should be a key concern for Hong Kong, and the SAR’s MPF policy is long overdue an overhaul. Gary Tok, Greater China business leader of Mercer’s outsourcing business in Hong Kong, said the population is ageing rapidly — and Hongkongers live almost as long as anyone on earth, next only to the Swiss and Japanese — challenging everyone’s retirement planning.

What’s wrong with taking it all at 65?

The current norm: at 65, your employer stops contributing and your MPF provider sends a cheque liquidating your investments. But Mercer says longevity itself is the risk in retirement planning: a 65-year-old Hong Kong man has a one-in-four chance of living past 90.

Why are minimum contributions grossly inadequate?

Mercer says even diligent lifetime savers may find the lump sum built from minimum contributions “grossly inadequate”. Some retirees may be unable to pay rent and cover living expenses at the same time.

What does Mercer propose?

Tok calls MPF “a great base, but needs updating: in today’s dynamic environment, it is necessary to keep moving with the times to keep Hong Kong one step ahead.” Staying invested rather than liquidating at 65 could be the better option — after all, the money must last 25 years or more.

For withdrawal-at-65 rules, visit the MPF education hub; to compare retirement investment choices, see MPF fund comparison.