Who is the MPF actually designed for? Forced saving — or robbing the poor to pay the rich?

Who is the MPF really designed for? Seven or eight in ten Hongkongers save on their own anyway. Those who don’t save are low earners, big spenders, intermittent workers or chronic debtors. Force them to save an extra 10% — how much will they really accumulate? They’ll gamble it away after retirement, and the government will have to support them regardless.

Who really pays the employer’s 5%?

It comes out of workers’ wages anyway. Why 10%? The employer’s 5% is priced into your salary — salary cost is salary cost; without the MPF, employers would just pay higher wages. So that 5% is squeezed from workers’ pay too.

What does forced contribution cost society?

Opportunity cost: money that could fund study, marriage, flats or businesses. To cover the two or three who won’t save, seven or eight natural savers are forced into 10% contributions locked into capital markets — a huge opportunity cost for society. That 10% could otherwise fund further education, marriage, home purchases or startups, growing productivity far more than parking it in capital markets.

How outrageous are the fees?

Nearly 1.9% a year here; 0.6%–0.8% overseas. Year in, year out, fund companies take nearly 1.9% while overseas peers charge 0.6%–0.8%. Imagine what someone working from 20 to 65 hands over in total. The system is robbing the poor to pay the rich.

So what is the verdict?

Natural savers don’t need the MPF; non-savers aren’t helped by it. The seven or eight can retire on their own savings or their children’s support; the remaining one in ten will depend on the government with or without the MPF. As it stands, the MPF constrains society’s productivity.

To see how steep MPF management fees run, visit MPF fund comparison.