Annuity kitty to hit $20b if demand soars

Top News | Samantha Wong 6 Jul 2018

The government is prepared to double the first tranche quota of the life annuity scheme from HK$10 billion to HK$20 billion if there is an over-subscription.

The Hong Kong Mortgage Corporation Annuity Limited yesterday launched the insurance plan that allows retirees aged 65 years or above to turn part of their savings into life-long fixed annuity income.

The scheme offers retired people another financial option, Norman Chan Tak-lam, chairman of the mortgage corporation and chief executive of the Hong Kong Monetary Authority, said at the launching ceremony yesterday.

The HKMA will invest and manage the premiums received to ensure the financial viability and sustainability of the plan, Chan said.

Applicants can invest in a single premium ranging between HK$50,000 and HK$1 million in exchange for monthly payments.

For a single premium of a maximum HK$1 million, the guaranteed monthly annuity payment for a 65-year-old male would be HK$5,800, and HK$5,300 for female.

Edmond Lau Ying-pan, executive director of the mortgage corporation, said monthly returns for men will be more than those for women because females have a longer life expectancy.

Subscribers will be able to receive the annuity payment as early as November. Applicants can obtain the subscription form from 700 branches of 20 banks across Hong Kong. The registration period will last for three weeks from July 19 to August 8.

Alternatively, applicants can register online and are not required to pay the premium in the first stage.

Lau said the mortgage corporation would try its best to satisfy the demands of applicants. It will set an allotment threshold if the total subscription amount exceeds the final issue size.

"Applicants whose intended subscription amounts are smaller than or equal to the threshold will be fully allotted," Lau added.

The annuity plan can be surrendered within the guaranteed period but may incur a loss. There is no death benefit after the guaranteed period.

Financial consultants believed about one third of a retiree's assets should be invested in the annuity scheme, while their remaining savings could be reserved for health care or other expenses, said Daric Wu, associate director of Convoy Financial Services Limited.

Wu said the scheme can also foster the development of the local annuity market, and provide an alternative option for retirees apart from subscribing to private insurance.

Applicants will receive the notices of allotment result starting from mid-September, and will be told to attend sales meetings to complete the application procedures.

The applicant will pay the premium after the sales meeting, and receive the guaranteed monthly annuity payment the next month.

But due to the large number of applicants expected, the authority said the sales period of the distribution procedures is expected to be completed only in March next year.

Search Archive

Advanced Search
November 2018
S M T W T F S

Today's Standard



Yearly Magazine

Yearly Magazine