Hong Kong’s retirement annuity scheme refined after 40 per cent of initial subscriptions failed
- The annuity scheme was announced earlier this year as part of an effort by the government to prepare for an ageing population
- The plan was criticised by many for generating a low return, locking up liquidity and having a cap that limited the monthly income received
The Hong Kong government has revised its public annuity retirement plan after complaints about inflexibility and after 40 per cent of the initial subscribers either pulled out or could not be contacted.
The changes now allow for the full premium to be returned in the event of a subscriber’s death, one withdrawal for medical and dental purposes and a relaxation of the premium cap per person, scheme operator HKMC Annuity said on Wednesday.
“We have received opinions from the market about inflexibility and the incomprehensive protection offered by the plan, so we decided to launch these enhancement measures to make our product more suitable and favourable for the city’s retirees,” said Edmond Lau Ying-pan, executive director and chief executive of the HKMC Annuity.
The initial annuity scheme, announced earlier this year as part of an effort by the government to prepare for an ageing population, allowed senior citizens to invest a maximum lump sum of HK$1 million and in return receive a lifelong monthly income of HK$5,800 for males and HK$5,300 for females after retirement, with the government shouldering any losses.
But the plan was criticised by many for generating a low return, locking up liquidity and having a cap that limited the monthly income received.
Among the subscribers who registered between July and August this year, 10 per cent could not be contacted while 30 per cent said they needed more time to think about it.
