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Hong Kong’s MPF net inflows seen at three-year low in 2021

By Hui Ching-hoo   
January 18, 2022

Hong Kong’s Mandatory Provident Fund net inflows declined in 2021 to the lowest level in three years as the coronavirus crisis continued to weigh on the city’s economy, according to local pension advisory agency MPF Ratings.

It estimates that the MPF’s net inflows last year was HK$46.87 billion (US$6 billion), down from HK$52.02 billion in 2020 and HK$54.14 billion in 2019.

Official figures from the Mandatory Provident Fund Schemes Authority (MPFA), supervisor of the MPF industry, will only be available in March or April.

“MPF’s net inflows decline reflects the general impact Covid has had on Hong Kong,” MPF Ratings Chairman Francis Chung says in a report on January 15.

“Businesses have had to reorganise meaning perhaps fewer employed workers, members eligible for early retirement may be doing so, and Hong Kong has also seen historical higher levels of permanent departures, all of which are headwinds to net inflows into the MPF system,” he says.

Thousands of Hong Kong residents have left the city in recent years due, among other things, to steep property prices.

Figures from the MPFA show that MPF withdrawal claims by residents leaving Hong Kong for good rose to 32,300 in the 12 months to June 2021 from 30,300 in the preceding 12-month period.

MPF schemes that invest in Hong Kong and China stocks attracted the largest inflows last year, estimated at HK$25.92 billion, followed by US equities funds at HK$11.89 billion, MPF Ratings says.

Meanwhile, conservative funds saw the largest net outflows, estimated at HK$10.49 billion.

Despite the decline in net inflows, MPF Ratings expects MPF assets to have risen 3.74% year-on-year to HK$1.18 trillion in 2021 thanks to returns from investments.