As young people become more educated and lead a healthy lifestyle, they are increasingly looking forward to a comfortable and active life after retirement.
Like most Hong Kong employees, younger workers save up for retirement by contributing to the Mandatory Provident Fund (MPF) and have the option to make additional contributions voluntarily. They can ask their employer to deduct the extra amount from their salary or instruct their bank to transfer the sum from their personal account to their MPF account. Some employers have set up employee benefits programmes, where both parties make additional contributions to the MPF.
'The MPF is more beneficial to young people because they have more years to accumulate their wealth. They are well-placed to take advantage of the compound effect of the scheme over the long run,' says Lau Ka-shi, managing director and CEO of Bank Consortium Trust.
'Nowadays, people study more, start working later and live longer. Many young people don't want children. If you don't take care of yourself, who is going to take care of you? Start thinking about retirement and find out more about the MPF.'
According to HSBC's latest survey, the 1,000 MPF members interviewed believe their funds at retirement would only be sufficient to support their basic living expenses for an average of 6.7 years. Alex Chu, director and head of employee benefits at HSBC Insurance, says MPF members should consider making more voluntary contributions.
Chu says that by contributing a fixed amount regularly, regardless of fund prices, MPF members buy more units when prices are low and vice versa. As the market grows over the long term, investors with more units will have more returns. 'This dollar-cost averaging strategy is most beneficial to young people investing in equity funds.'
Luk Kim-ping, head of institutional business at Fidelity Worldwide Investment Hong Kong, says that to lead a basic life during retirement people would need to spend 67 per cent of their monthly income, and 85 per cent of it to enjoy an active and varied lifestyle. Contributing 5 per cent isn't enough to ensure quality living after retirement.