Middle-Aged Hongkongers Can't Quit Yet

People retiring soon don't have much saved in their MPF

 

Hong Kong's Mandatory Provident Fund, or MPF is a compulsory savings scheme for retirement. Both the employee and employer contribute a maximum of HK$1,500 each per month and the employee decides which mutual funds to invest in.

As a result, a maximum of HK$36,000 as a principal is added to the MPF per year, and since it was only started in 2000, people who are now in their 50s feel the amount in their MPF accounts is hardly enough to financially cover them in retirement, and as a result many want to continue working.

HK$36K per year is invested in the MPF

In a survey commissioned by the Hong Kong Retirement Schemes Association, a group that promotes pension schemes in the city, nine out of 10 middle-income earners reaching retirement age don't want to stop working because they feel their pension is hardly adequate.

Many also worry that because of the coronavirus pandemic, healthcare costs will rise.

The MPF on average can only provide about 40 percent of a person's salary after retirement. 

"Many people in Hong Kong don't plan for retirement and fail to make a long-term plan," said Doris Ho, chairman of the Hong Kong Retirement Schemes Association.

"The MPF is not going to be enough for those who are now in their 50s. The middle-class individual may either need to continue to work or they will need to accept a lower living standard if they are forced to retire at 60," said Kenrick Chung, general manager of employee benefits at Realife Insurance Brokers.

HK should encourage more mature workers

"This will be bad news for restaurants and retailers in the city as Hong Kong has an ageing population. Many people are entering retirement age. If they are unemployed and need to tighten their belts, they will spend less on dining out or shopping. It is inevitable."

However the opposite is true for younger employees, who have had more time to contribute to their MPF and as a result will have a bigger sum when they retire.

Hong Kong is one of the fastest-ageing populations in the world. Between 2018 and 2038, the number of people aged 65 and older will almost double from 1.27 million to 2.44 million, and their age group will increase from 18 percent to 32 percent, according to government estimates. Life expectancy in the city is also the highest in the world at more than 85 years, according to the World Bank data from 2018.

HK has the fastest-aging population in the world

While Hong Kong does not have an official retirement age, many companies require staff to retire at 60 or 65, similar to civil servants -- but they have much higher salaries and more benefits than others.

These days retiring at 60 is very young and Hong Kong employers can't just kick out employees who have a lot more to offer in terms of knowledge and experience, especially to the younger generation. This is particularly true in trades, but it applies to all kinds of companies. 

Will the government read this report and take it seriously? Chief Executive Carrie Lam Cheng Yuet-ngor herself is 64 years-old. She says her administration is concerned about social welfare. Time's ticking, Carrie...