Hong Kong will need to do more to encourage voluntary contributions to the Mandatory Provident Fund (MPF) or other retirement schemes to ensure the money lasts through their post-work life now that people are living longer.
The average life expectancies for men and women in Hong Kong are 86 and 90 years, respectively.
According to a report from the Hong Kong Retirement Schemes Association (HKRSA) and UK insurance brokerage and advisory firm WTW, a male retiree will need at least HK$6.6 million (US$846,000) to last until he is 97, the upper age limit of the older demographic, while a female will need HK$7.1 million to sustain herself until she is 100.
William Chow, head of retirement for Hong Kong and Macau at WTW, said the MPF falls short of meeting those needs.
He was speaking at a press briefing on June 3 to launch the report, which outlined three key measures to enhance retirement protection: facilitate voluntary contributions to retirement savings schemes, diversify decumulation products, and stronger support from employers.
It proposes setting distinct, tax-deductible limits for voluntary contributions to the MPF and for qualifying deferred annuity policies. The limits for both are now combined, with the maximum at HK$60,000.
Chow said that separate tax-deductible limits for both can better optimise retirement savings.
The report also recommends stronger coordinationbetween employers and regulatory authorities to ensure that policies and systems work smoothly to move contributions, benefits or unclaimed assets between different accounts.
“Our study shows that employers are already playing an important role, with many contributing above statutory minimums,” Chow said. “However, more can be done to strengthen support through better plan design, targeted financial education, and mechanisms that make saving easier and more relevant for employees at different life stages.”
