Retirement challenges are a world wide phenomenon, with all developed economies dealing with one form of the challenge or another. The points below summarise Mercer’s outlook for Hong Kong: 

• Hong Kong is a society which values its aging population. The high life expectancies indicate that many of us will live well beyond retirement age. Current structures are likely to apply extreme stress to future workers given changing age structures, and are likely to involve an increasing level of failure to allow older people to live with the dignity they deserve.
• Some simple changes can be learned from other countries and introduced now. This will help Hong Kong to evolve and offer its citizens a better retirement system.
• MPF providers have both the opportunity and responsibility to review their positions – are they operating as efficiently as possible? Some providers are starting to cut their fees – we await responses to see if the general level of fees in the market will reduce.
• There is likely to remain a question mark over the smaller providers – are they big enough to operate efficiently? Should they look at how they can reduce costs? Should the MPFA impose minimum size requirements to encourage efficiency, or be more direct and impose explicit maximum fees providers can charge members?
• Employers should consider their fiduciary duty in selecting the best MPF provider for their employees. There is currently a misalignment in that the employer selects the MPF provider but the employees pay for the services and bear the investment risk.
• Much can be done to develop the withdrawal phase of the system so that part of the accumulated balance at retirement is safeguarded well into retirement.
• The design of the MPF can be evolved to encourage higher savings rates by both employers and employees and allow employers to use the MPF system to efficiently provide retirement benefits in a way that will attract and retain the best employees.
• Providing individuals with education and tools to engage them in their financial future and also empower them to make the right choices on their retirement savings is crucial.
• Fees in the MPF system remain high relative to other markets. Measures that increase competition and drive down fees should be encouraged.
• Doing nothing is not an option. Some form of action is needed to keep Hong Kong where it belongs – One Step Ahead.