Hong Kong pensions regulator steps in to prevent speculative activity through Mandatory Provident Fund

Hong Kong’s pensions regulator has warned all 14 Mandatory Provident Fund providers to tighten control over their schemes to prevent abuse by clients who are gambling on the stock market through their retirement savings, the South China Morning Post has learned.

The providers have also been told to review their controls system to prevent any money laundering through the MPF, several fund managers told the Post, which also saw a circular to that effect issued by the Mandatory Provident Fund Schemes Authority. The regulator met them around the Lunar New Year holiday to discuss such concerns.

“The MPFA has recently noticed significant fluctuations in the amount of special voluntary contributions,” the authority said in a reply to an enquiry by the Post. “In particular, they are required to establish control measures to avoid any voluntary contributions being used for short-term speculative activities.”

The authority urged all service providers to review their current arrangements for special voluntary contributions to ensure that withdrawal mechanisms complied with applicable legislation and objectives under the system. 

Manulife, the largest single MPF provider in the city, said it had decided to cease accepting special voluntary contributions.