MPF bounces back into profit, but fails to keep pace with Hang Seng
Retirement funds rebound from a loss in 2011 to a 12 per cent gain last year - the best return since 2009 - but fail to keep pace with stocks
The Mandatory Provident Fund (MPF) enjoyed its best returns since 2009 last year, but could not beat the Hang Seng Index.
The 453 retirement funds, which cover the city's 2.5 million employees, returned on average 12.07 per cent, swinging into the black from an average loss of 8.42 per cent in 2011 and improving on a 7.18 per cent gain in 2010.
It was the best year since 2009, when the funds returned 25.88 per cent after a 26 per cent loss in crisis-stricken 2008, according to data provider Lipper.
Last year's performance was better than the dismal MPF returns of late and much higher than the returns offered by bank deposits. But it fell short of the city's key stock index, the Hang Seng, which rose 23 per cent.
The MPF, criticised for its high management fees and low returns, is a compulsory retirement scheme that requires employers and employees to pay 5 per cent of individual salaries - up to HK$1,250 a month from each side - into funds run by banks, insurance firms or fund companies.
Bosses choose the fund provider but employees can choose which of the provider's funds they want the money to be invested in and can switch the fund manager for their part of the contribution once a year.