Hong Kong may have one of the best retirement systems in Asia but there is a lot of room for improvement, especially in terms of improving adequacy and coverage, according to pension experts at a panel discussion in the city last week.
The panel members were Jimmy Pun, chief executive officer of local trust company Adventist Charitable Foundation Ltd, Thomas Chu, chairperson of the CLP Group Provident Fund Scheme subcommittee, Lau Ka Shi, chairman of Hong Kong Trustees’ Association, and Janet Li, chairman and executive committee of the Hong Kong Retirement Schemes Association.
The session on April 11 was organised by Asia Asset Management.
Pun said adequacy and coverage of Hong Kong’s retirement system is still low.
“The coverage for pillar 1 is too small as it only targets the underprivileged, while the middle class coverage is too low,” he said. Pillar 1 is the mandatory, state-provided share of a retirement system.
Investment consulting firm Mercer’s pension system study last October ranked Hong Kong second in Asia, behind Singapore and ahead of Japan, Korea, Malaysia and Taiwan.
But a report published by the Organisation for Economic Co-operation and Development in mid-2024 noted that less than 30% of Hong Kongers are on track for a comfortable retirement.
Li talked about the importance of investor education. She said that the level of employees' awareness and understanding in terms of the accumulation phase is currently low.
"From my observation, there are so many things that we can look at and improve," she said.
Chu highlighted the various strategies provided by CLP’s pension fund, saying it was important to provide more investment products so that members can build a more diversified portfolio.
“Our members can choose a variety of strategies, from aggressive strategy to conservative strategy, to help them to achieve their investment objectives. We also allow our ex-employees to continue to manage their retirement savings on our provident fund scheme platform; they can continue to do so for 15 years after leaving the firm,” he said.
But Pun, while commending CLP for the 15-year grace given to former employees, argued that too many investment options can be counter-productive.
“I think it is not good to provide too many choices for members. The general population are not well-trained to choose between the various options available. A lot of information needs to be provided,” he said.
Lau touched on the impact of the eMPF platform, the centralised digital platform for Hong Kong’s Mandatory Provident Fund that went live last June.
“Members can benefit with easy access as well as timely information and also [by] being more engaged. I think hopefully eMPF should be a very good change to the ecosystem,” she said.