Many reduce spending to boost their pension amid MPF's poor returns

Themis Qi

Around 30 percent of Hongkongers reduced additional expenses and increased their Mandatory Provident Fund contributions, worrying they were not saving enough for retirement, a survey found, as the annualized net return of the city's pension fund fell to 2.6 percent.

Respondents who increased their MPF contributions were up 7 percent, as 35 percent were worried their savings would run out after retirement, according to an international survey by Fidelity.

Regarding spending, 38 percent said they overspent in the first six months of 2023 due to increased household expenses and transportation costs. But one-third of Hongkongers managed to boost their savings in the same period, with 38 percent "taking a higher-paying job" and 32 percent "reducing additional expenses."

This was part of Fidelity's latest Global Sentiment Survey that collected data from 26,000 global workers aged 20 to 75 in July 2023.

Hong Kong respondents had a minimum household monthly income of HK$15,000.

Over 60 percent of Hongkongers expressed worries about the "cost of living," "saving enough for retirement" and "the state of the economy," although 68 percent said they were optimistic about the future in the second half of 2023.

It also comes as Mandatory Provident Fund Schemes Authority said the overall annualized net return of the pension fund was only 2.6 percent as of March 2024.

The latest rate is 0.1 percent lower than in 2023, even though each MPF member is estimated to gain about HK$6,000 on average in the first quarter of 2024.

Among all fund types, the equity fund performed the worst with a 0.6 percent decrease in average net return, in line with the continuous fall of Hong Kong stocks, according to MPFA

The mixed asset fund topped with an average net gain of 4.9 percent.

themis.qi@singtaonewscorp.com