Third-quarter exits drain MPF of $1.7b

Hong Kong residents planning to leave permanently applied to withdraw a record HK$1.7 billion from their mandatory provident fund accounts in the third quarter last year - a surge of 72.6 percent quarter-on-quarter.

On a yearly basis, the planned withdrawal amount rose 21.9 percent.

There were 8,100 claims for withdrawing MPF benefits citing "permanent departure from Hong Kong" in the quarter, rising 35 percent quarter-on-quarter but falling 2.4 percent from a year ago, data from the Mandatory Provident Fund Schemes Authority showed yesterday.

For the first three-quarters last year, 21,700 claims withdrew a combined HK$3.99 billion from MPF accounts. During the same period on 2019, 22,000 claims withdrew HK$3.41 billion.

The authority said the number of claimants may not be equal to the number of claims because a member may be holding more than one account. It did not provide a reason for the departures.

In January, Bank of America estimated if those leaving sold a Hong Kong apartment for HK$7.53 million - the average price in the Kowloon district - and withdrew their pension savings then the capital outflow in 2021 could reach HK$280.2 billion.

In total, over five years, BofA said the capital outflow from Hong Kong could reach HK$588 billion.

A British Home Office study, published last year, estimated 153,300 people could arrive in Britain from Hong Kong in 2021 as the immigration changes came into effect. Emigration could be as high as 321,600 residents in the next five years starting in January last year, the study said.

Beijing's move to impose a national security law in June last year prompted Britain to offer refuge to almost three million Hong Kong residents eligible for the British National Overseas passport from January 31. On the same day, the Hong Kong government said it no longer considered the BNO passport a valid travel document.

MPFA said earlier this month that residents cannot rely on a BNO passport or its associated visa as evidence when they apply for early withdrawal of MPF. The total net asset values of the pension fund scheme reached HK$1.14 billion trillion as of end-December, with 4.46 million scheme members.

The annualized internal rate of return of the MPF system was 4.8 percent since 2000, beating inflation. Thanks to gains in equity funds, MPF reported a 26.2 percent annualized internal rate from April to December last year. The average fund expense ratio was 1.44 percent last year.