Pension scheme needs revamp to work

The Mandatory Provident Scheme (MPF), when implemented in December 2000, was an important step towards providing greater post-retirement financial security for Hong Kong's working population.

By mandating monthly contributions, it brought a new discipline and regularity to saving for later life and, in parallel, created an administrative framework to oversee the inflow and management of funds.

Few, though, claimed the system was perfect and over the years the MPF scheme has remained a work in progress.

Experts in retirement planning see where it can and should be improved, while government officials and commentators - at times apparently unaware of the practicalities involved - continue to suggest adaptations and add-ons aimed at creating a stronger social safety net for a steadily ageing community.

One imminent change, once legislation passes, will be the introduction of member choice. Expected to arrive next year, it will allow employees to decide on the provider to manage their individual contributions - but not those made by an employer - and to select from any of the 300-plus investment funds now available. In principle, this form of switching will be possible once a year, with the minimum amount set at HK$5,000, and the move has been widely welcomed.

'More choice is a good thing, but there is also more responsibility for the provider to educate and inform the member,' said Stuart Leckie, chairman of Stirling Finance and an adviser on many aspects of the MPF scheme. 'You don't want people chopping and changing all the time.'