More self-employed look to MPF

More self-employed people are concerned about their retirement protection, especially after the government launched the employment support scheme two years ago, said Mandatory Provident Fund Schemes Authority chairwoman Ayesha Macpherson Lau.

The number of self-employed people enrolled in MPF schemes rose from 215,000 in April 2020 to 229,000 in October 2020 - a 5 percent increase to a 78 percent enrolment rate in just half a year.

Lau also said that given the wide coverage of the MPF system among the working population, the use of MPF records can simplify the administrative procedures for certain employment-related relief measures.

For example, having a self-employed person's MPF account is one of the eligibility criteria for the Employment Support Scheme launched by the government during the Covid-19 outbreak, she said.

"As for applicants for the Temporary Unemployment Relief, if they possess MPF accounts and give relevant authorization, the government-appointed agent could obtain their MPF account information directly from the MPF trustees for the purpose of verifying their applications," Lau said.

This means processing times are shortened and applicants can receive faster assistance.

"This demonstrates the wider social function of MPF in addition to providing retirement protection for the working population," she added.

Under the MPF legislation, self-employed persons aged 18 to 64 must make mandatory contributions equal to 5 percent of their incomes to an MPF scheme on a monthly or yearly basis.

Lau also encouraged self-employed persons to make voluntary contributions beyond the mandatory requirement to increase their retirement savings.

"For example, if a self-employed person with a monthly income of HK$18,500 starts making MPF contributions at the age of 25, assuming that the income level is adjusted annually at the inflation rate only and the average annualized investment return rate is 4.3 percent, it is estimated that about HK$756,000 of MPF could be accumulated upon retirement at the age of 65 thanks to the compounding effect," she said.

"If the person in this example makes voluntary contributions equivalent to 5 percent of his or her income each month, the MPF accumulated at the age of 65 would increase to HK$1,512,000, thus providing an even more solid retirement protection."