People are changing their attitudes to retirement savings as the MPF reaches $100 billion
When the Mandatory Provident Fund (MPF) was introduced almost four years ago, reactions from the working public ranged from apathy to hostility. Efforts to sell the benefits of long-term saving fell rather flat, as did warnings of a looming global pension crisis and the dangers of overly conservative investment strategies.
But there's nothing like money to get people's attention. As cash has begun to accumulate, people are beginning to pay more attention to their MPF accounts. Even expats who don't plan to stay in Hong Kong until their twilight years have begun to notice the growing sums which will serve as a tidy going-away present.
Between us we've racked up a healthy $100 billion, according to the Hong Kong Investment Funds Association (HKIFA), and a further $2 billion is added in contributions every month.
And while returns suffered from bad timing, which saw the MPF launched into an unprecedented three-year equity bear market, last year's rebound boosted returns and enthusiasm for the project.
One of the main benefits of the renewed focus on MPF is that more people are realising that, despite the growing sums, these savings alone will not be enough to fund a comfortable retirement. At current rates of contribution, which for most represents 10 per cent of salary up to the cap of $2,000 ($1,000 from employer, $1,000 from employee), industry figures suggest this will be enough to replace 30 per cent of pre-retirement income - hardly enough to keep up the club membership.