Letters | How MPF could allow unemployed Hongkongers to withdraw funds to survive the coronavirus pandemic

Name: Jobless struggle to make ends meet in Hong Kong as city battles coronavirus and recession
Uploaded: 2020-09-13T23:30:18.000Z
Duration: 4 min 53 s
Description: Jobless struggle to make ends meet in Hong Kong as city battles coronavirus and recession

Setting three limitations could address concerns that the Mandatory Provident Fund Authority or asset management companies might suffer from cash shortages due to a flood of withdrawals

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Letters

Published: 7:30am, 14 Sep 2020Updated: 7:30am, 14 Sep 2020

Pursuant to the guidelines of the Mandatory Provident Fund Authority and related ordinances, accrued benefits in the MPF may be withdrawn before the age of 65 only in six situations: early retirement, permanent departure from Hong Kong, total incapacity, terminal illness, a small MPF balance, and death.

Early this year, some lawmakers and pension experts suggested that the government consider the feasibility of early MPF withdrawal for the unemployed who are suffering financial hardship due to the pandemic. Several pension funds in the Asia-Pacific, including Malaysia, Australia and the Philippines, have moved to alleviate members’ financial hardships by allowing early withdrawals, and the deferring or reducing contributions.

The stated purpose of establishing the MPF is to provide basic retirement protection, and the arrangements for withdrawal from accrued benefits are regulated by law. Withdrawal or suspension of contributions due to short-term financial difficulties does not meet legal requirements.

In addition to regulatory considerations, early MPF withdrawal under the current unsatisfactory investment environment may result in huge losses to the MPF account holder due to the sale of fund assets at low prices.

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Jobless struggle to make ends meet in Hong Kong as city battles coronavirus and recession

In the circumstances, I recommend that an early withdrawal from the MPF scheme should be implemented only if: 1) the applicant is unemployed after January 2020, 2) the maximum withdrawal amount is set either at 50 per cent or HK$50,000 (US$6,451) and 3) this is a sunset provision.