Hong Kong residents’ nest eggs shrink by HK$33,300 per person as Mandatory Provident Fund posts HK$152.7 billion first-half loss

The Mandatory Provident Fund (MPF) reported a loss of HK$152.7 billion in the first six months, the worst interim performance on record

The loss in the compulsory pension scheme translates to a HK$33,300 diminution in the retirement nest eggs of each of the MPF’s 4.6 million savers

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Pedestrians in front of a residential complex in Hong Kong on May 20, 2022. Photo: AFP

Published: 2:44pm, 5 Jul 2022Updated: 11:36am, 6 Jul 2022

The nest eggs of Hong Kong’s 4.6 million pension holders shrank by HK$33,300 per person in the first six months of 2022, after a 6.6 per cent drop in the city’s stock market benchmark drove the Mandatory Provident Fund (MPF) into its biggest half-yearly loss.

The city government’s compulsory retirement scheme reported a loss of HK$152.7 (US$19.45 billion) in the first six months, according to data provided by MPF Ratings, an independent pension research firm. Overall, the fund lost 12.96 per cent in the first half, which is the scheme’s worst interim performance since the launch of MPF in December 2000.

“With a number of markets at or near bear-market territory MPF members will be disappointed with this year’s losses,” said MPF Rating’s chairman Francis Chung. “However, falling markets can offer good opportunities to invest in quality assets at lower prices. Members should also remain invested and diversified to maximise the compounding effect that sees wealth grow exponentially over their working life.”

The diminution of the retirement plan adds to the woes of Hong Kong’s working population and pensioners alike, as the city grapples with soaring borrowing costs, rising unemployment and shaky business prospects caused by a resurgent Covid-19 outbreak.

MPF policy holders can put their monthly contributions into a portfolio of nearly 400 investment funds, most of which posted reduced returns. The MPF’s returns to pensioners had been diminishing over the past four years, dropping from a 12.7 per cent gain in 2019 to a 12.2 per cent increment in 2020, and then to a 0.6 per cent rise last year.