High compliance helps push savings to $24b a year, more than twice initial expectations
Contributions to Hong Kong's employee savings system are running at twice the level envisaged by government planners when the scheme was introduced five years ago, and overall fund returns have been unveiled for the first time.
Annual contributions to the Mandatory Provident Fund (MPF) have reached $24 billion a year. When the scheme began in 2000, it was expected to draw $10 billion a year, according to Mandatory Provident Fund Schemes Authority chairman Charles Lee Yeh-kwong.
'The high compliance rate has led to the funds growing rapidly. At present, 2.18 million employees are covered by the MPF, representing 96.7 per cent of relevant employees,' Mr Lee said.
He said the average annualised rate of return for MPF assets was 4.3 per cent from April 1, 2001 to March 31 this year.
That performance is being treated as a vindication of the scheme which continues to draw fire from small businesses and has faced criticism from at least one investor activist for its high expense ratio.
Fund managers said strong performances in stock and bond markets from mid-2003 lie behind the substantial size of the pool of funds in the scheme - whose contents are invested on a worldwide basis at the discretion of individuals.
