The direction of MPF development

By Professor Victor So, Dean of Business, Hang Seng Management College: The MPFA recently outlined MPF development directions — letting members withdraw part of contributions for home purchases, children’s education, medical treatment, plus the bolder full portability. I welcome any MPF improvement, but I’m not optimistic about these proposals; they can’t realistically happen in the short term (one to two years).

Why can’t early withdrawal happen soon?

The concept is muddled: how is the MPF different from ordinary savings? Withdrawing before 65 is attractive in principle — the MPF is forced savings, and early access adds freedom and flexibility. But that convenience has costs: allowing early withdrawal means smaller balances at retirement, against the retirement-protection purpose. More puzzling: if the MPF can fund home purchases and children’s education, how is it different from ordinary savings? If they’re essentially the same, why limit it to housing and children’s education? What about the childless wanting self-improvement? Why is withdrawing for a flat OK but for a phone not? Debates under a muddled concept never end.

What about full portability?

Right direction, but also can’t be rushed. The bolder full portability deserves support, but system and operational readiness take time. MPF reform is a long project — expecting transformation in a year or two isn’t realistic.

For current MPF early-withdrawal rules, visit the MPF education centre, or compare schemes at MPF fund comparison.