MPF looking to expand as Singapore tops field

Themis Qi

The Mandatory Provident Fund Authority says it will continue to encourage launching of more retirement products, as Hong Kong received a higher score in a global pension index but was surpassed by Singapore this year.

The Mercer CFA Institute Global Pension Index by American asset company Mercer and the CFA Institute compared 44 retirement income systems in terms of adequacy, sustainability and integrity, covering 65 percent of the global population.

Hong Kong scored 64.7 this year compared to 61.8 a year ago, though it dropped to No 2 in Asia behind Singapore's 74.1.

Hong Kong was rated C+, the fourth-best group, this year, while Singapore was categorized into the B group.

Iceland (84.7) has topped the list for the second year in a row, followed by the Netherlands (84.6) and Denmark (82.0).

In terms of integrity, with a score of 87.6 this year Hong Kong continues to rank first among pension systems in Asia, which the MPFA attributed to the city's sound legal and financial systems and robust regulatory mechanism.

Hong Kong scored 61.5 in adequacy, higher than last year, but lower than Singapore's 77.3. The MPFA said it has been encouraging MPF scheme members to make voluntary contributions in addition to mandatory contributions to enhance their retirement savings.

On sustainability, Hong Kong had 52.1, also higher than last year, while Singapore received 65.4.

The MPFA said economic cycles and market ups and downs affected the fund inevitably, but believed the robust system can withstand market fluctuations.

Hong Kong's total Mandatory Provident Fund assets have fallen below HK$1 trillion - retreating to June 2020 levels - following investment losses of HK$82.1 billion in September, while investment losses for the first nine months this year accumulated to HK$258.9 billion, or HK$56,500 for each of 4.57 million members, MPF Ratings showed.

The authority said it will continue to develop retirement products and diversity the asset classes, thereby encouraging trustees to develop better retirement investment solutions to enhance the sustainability of the MPF system.