Hong Kong’s proposed tax break of US$7,650 will encourage additional retirement savings, say top pension providers

Legislators on Wednesday will vote on a law change to allow the government to offer up to HK$60,000 in tax incentives on extra pension savings

HSBC Life says tax incentives could encourage pension savings as seen from Singapore’s experience

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Pension providers say Hong Kong’s move to give tax incentives of up to HK$60,000 will encourage individuals to invest more in voluntary pension products. Photo: AFP

Published: 8:00am, 19 Mar 2019Updated: 8:44am, 19 Mar 2019

Hong Kong’s biggest pension players – HSBC, Manulife, Prudential and AIA – said the government’s proposed law change to offer up to HK$60,000 (US$7,650) in tax incentives will encourage additional savings for retirement.

“This is the first time Hong Kong is using tax incentives to encourage voluntary retirement contribution,” said Edward Moncreiffe, chief executive of HSBC Life (International).

He said that Singapore saw an increase in voluntary pension contribution after tax incentives were introduced. “Singapore has shown that tax incentives are a useful tool to encourage more retirement savings.”

The companies said they will launch tax-deductible pension products after the government scheme is introduced on April 1 that will go a long way in addressing the shortfall in employees’ retirement savings.

An AIA survey released in January showed that Hongkongers would have to work until 70 to keep up with their retirement expenses. Photo: Nora Tam

Lawmakers on Wednesday will vote on a law change to allow the government to offer up to HK$60,000 in tax incentives per person per year to encourage additional savings for retirement.