Response to Hong Kong annuity scheme ‘within expectations’ but likely to fall short of US$1.27b target

Even though most senior citizens are not satisfied with the low returns, the scheme has drawn investments from retirees as old as 90

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The Hong Kong government’s public annuity scheme offers the city’s elderly residents aged 65 to invest up to HK$1 million each in exchange for monthly payments. The plan is the Hong Kong government’s latest initiative to cope with the city’s rapidly ageing population. Photo: EPA-EFE

Published: 7:15pm, 7 Aug 2018Updated: 10:38pm, 7 Aug 2018

Hong Kong government’s HK$10 billion (US$1.27 billion) public annuity scheme may not quite hit its target when the subscription period closes on Wednesday as senior citizens find the returns to be too low, but the scheme’s operator says the “response is within expectations”.

Launched on July 19, the scheme is open to those aged 65 and above and they can invest between HK$50,000 and HK$1 million in exchange for lifelong monthly payments. The government planned to double it to HK$20 billion if there was sufficient demand.

The initial response, however, showed that there maybe no such need to lift the cap as many retirees contacted by the South China Morning Post considered the returns to be too low.

(From left) HKMC Annuity CEO Edmond Lau Ying-pan, executive director Raymond Li Lung-cheung, and vice-president Kelvin Lee York-kei attend a press conference to launch annuity scheme at L’hotel Nina Et Convention Centre in Tsuen Wan on July 5. Photo: Winson Wong

“After going through the details, it appears the returns are very low at just about 4 per cent, so I decided not to go for it,” said C T Hew, a 68-year-old public affairs consultant, echoing the concerns of many senior citizens the Post spoke to.

Hong Kong’s US$1.27 billion annuity plan fails to ignite on launch day amid concerns about returns, gender

“Many of my friends discussed the scheme and we decided not to invest because of the low returns. If the government were to increase the returns to a higher level, maybe my old friends and I would consider it,” he said.