Hong Kong’s new pensions tax break gives early boost to retirement savings

Hong Kong’s new tax incentives for pension contributions have already encouraged more people to save for their retirement, a trend that could help ease the burden of an ageing population, according to regulators and insurers.

Several major pension providers including HSBC, Prudential, Manulife and AIA told the Post they had seen a strong response to their new tax-deductible deferred annuity and Mandatory Provident Fund products.

HSBC received 3,500 applications for MPF tax-deductible voluntary contributions and more than 5,000 for deferred annuity schemes by the end of May, according to Greg Hingston, head of retail banking and wealth management, Hong Kong, at HSBC.

The scheme, launched on April 1, allows employees to enjoy up to HK$60,000 in tax-deductible income if they buy a deferred annuity scheme or voluntarily contribute more to the MPF scheme. Depending on salary and other allowances, the tax savings could range from HK$180 to HK$10,200 per person per year.

The plan is the government’s latest initiative to cope with Hong Kong’s rapidly ageing population. The city, which lacks a comprehensive social security system, has 1.3 million people aged 65 or over, about 18 per cent of its total population, but that is expected to increase to 31 per cent by 2036.