Hong Kong’s MPF is little more than a cruel joke. Here’s why

It was September 1997. Hong Kong had transitioned smoothly from British to Chinese sovereignty. The Thai baht had been devalued and there were foreign debt worries in Indonesia and South Korea, but there was as yet no sense of the awful crash that was to envelop Asia. 

The titans of global finance were gathered for the World Bank meeting in the newly-opened Convention Centre. The auditorium was packed, and on the podium the heads of the world’s leading fund management houses were gunning for one thing alone: for Hong Kong to establish a compulsory pension scheme.

The scene was set for one of my scariest appeals ever. With a microphone in my hand, I stood up to commend the panellists for their concern about the long term income security of the Hong Kong people – but could not endorse their plans for Hong Kong’s proposed Mandatory Provident Fund. Instead, I claimed that Hong Kong had a different approach to ensuring financial security in old age, in the absence of compulsory pensions. It was called “saving”.

I talked about how indelibly impressed I had always been by modest, hard-working Hong Kong families who without qualifications, but lots of sweat and patient saving, managed to put their kids through university, or managed to buy modest homes in Canada or Australia during Hong Kong’s uncertain transition years.

To my great pleasure, the audience erupted in applause, and sour faces flashed across the podium. But my glorious moment was short-lived. Hong Kong’s Mandatory Provident Fund was launched anyway, just over two years later. So much for my persuasiveness or lobbying power.

I must confess I had particular reasons for my bias against pensions. Ever since my father’s factory crashed during the tough Thatcher years, and his company pension scheme evaporated, I had seen in very stark terms the price a family can pay for trusting the government, and the national pension scheme, to deliver security in old age.