MPF early withdrawal: the 2011 plan to limit it to the terminally ill

On 16 December 2011, MPFA chairwoman Anna Wu and Rimsky Yuen, chairman of the review working group on withdrawal of MPF benefits, launched a three-and-a-half-month public consultation on early withdrawal. The proposal was far narrower than the compassionate scheme once studied: only members certified as having a “terminal illness” could draw early — home purchases, children’s education and unemployment were all ruled out.

Who qualifies for MPF early withdrawal?

Under 2011 rules, members could take MPF early only on five grounds: early retirement at 60, permanent departure, total incapacity, death, or a balance under HK$5,000 with no contributions for a year. The MPFA proposed a sixth — certified terminal illness — allowing lump-sum or instalment withdrawal; housing, schooling and unemployment would not qualify.

The consultation timetable

Defining “terminal illness”

Rimsky Yuen explained the logic: for a terminally ill patient whose life is counting down, MPF has lost its retirement-protection meaning, so there is no reason to keep the account — early withdrawal for medical or other use is justified. But the definition was left open: whether terminal meant six or twelve months of life remaining (local critical-illness policies generally used six to twelve months); whether one or more specialists must certify; whether Chinese medicine practitioners counted; and whether each withdrawal should be capped. Since some terminal patients recover and may still need retirement savings, and given the extra admin cost and the rarity of such cases, the MPFA leaned towards no cap.

What was ruled out

The MPFA had earlier studied a compassionate scheme covering critical illness, family upheaval, unemployment, home purchases and children’s education. All were rejected this time. Yuen said early withdrawal for housing, schooling or unemployment ran against MPF’s retirement-protection purpose — “for a home purchase, Hong Kong’s MPF contribution rate is lower than overseas, so a member’s accrued balance may not help much with buying a flat.” He added, though, that well-argued public submissions during the consultation would be considered with an open mind.

Lump sum or instalments — member’s choice

Alongside the new early-withdrawal ground, the MPFA proposed letting members past 65 choose freely between a lump sum and instalments, with no limits on frequency or amount. See the MPF education guides for the current early-withdrawal rules.