Workers dream of $5m nest egg but mere 16pc opt for MPF's TVCBusiness | Kevin Xu 21 Jan 2020
Only 16 percent of the working population in Hong Kong have joined the Mandatory Provident Fund Tax Deductible Voluntary Contributions while more than half estimated that they need over HK$5 million to support their retirement life, according to a survey by the Hong Kong Investment Funds Association.
The association surveyed a working population of nearly 1,000 in last year's final quarter.
The survey found that 57 percent of the respondents said they hope to retire at 61, while 54 percent estimated that would need more than HK$5 million to support their retirement; and it would take 14 years to save for this.
Meanwhile, employees expected that deposits would take up about 35 percent of their post-retirement income, while MPF or Occupational Retirement Schemes Ordinance investments could only contribute about 14 percent to the retirement nest egg.
Over 70 percent of respondents had heard about MPF TVC.
However, only 16 percent indicated they had joined TVC, with 23 percent expressing an interest in joining, with various choices available in the market and some of the working population considering the application procedures too complicated, said Terry Pan, chairman of the Hong Kong Investment Funds Association Pensions Subcommittee.
Amongst those interested, nearly 60 percent couldn't decide the amount to be put into TVC, while 73 percent indicated they would put no more than HK$60,000, possibly reflecting the cap is a key factor to consider, said HKIFA. A taxpayer may apply for tax deductions of up to a maximum of HK$60,000 per year in respect of qualifying deferred annuity premiums of a qualifying deferred annuity policy or MPF TVC.
As such, the association suggested the MPF TVC and the QDAP should each enjoy a separate tax deduction of HK$60,000.
It said the two products serve different retirement purposes and should be complementary rather than mutually exclusive.