Mandatory Provident Fund (MPF)
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Elderly people sit on a bench while a younger man takes the stairs in a public garden in Jordan on October 10. Photo: K.Y. Cheng

Letters | MPF has been expanding investment options to serve members before and after retirement

  • The Mandatory Provident Funds Schemes Authority aims to strike a balance between enabling members to achieve investment performance and safeguarding against avoidable risks
  • Over the years, the MPFA has broadened investment options to include, for example, gold exchange-traded funds and to offer more flexibility in investing in Reits
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In response to the letter, “MPF system can be updated to better meet members’ needs before and after retirement” (October 11) by representatives of the Hong Kong Investment Funds Association pensions subcommittee, I am writing to provide supplementary information to enhance your readers’ understanding of our continuous efforts to improve the Mandatory Provident Fund system by providing MPF scheme members with more diversified investment options.
As the MPF system develops and more MPF scheme members get closer to retirement, there has been growing demand for more investment choices tailored to the investment appetite of scheme members approaching retirement or in the post-retirement phase for their accrued MPF benefits.

Noting this demand, the Mandatory Provident Fund Schemes Authority has been encouraging MPF trustees and the fund industry since 2019 to develop new investment solutions for both the accumulation (pre-retirement) and withdrawal (post-retirement) stages of MPF scheme members. In April 2020, the MPFA issued principles for developing retirement solutions to provide guidance for MPF trustees. Three retirement solutions have been launched by them so far.

The MPFA will continue to explore feasible retirement solutions with trustees and expects more related products to be launched to cater to the needs of scheme members.

Regarding the suggestion of relaxing investment restrictions to allow MPF funds to invest in a wider range of asset classes, I must point out that the investment restrictions and requirements for MPF funds are in place to ensure scheme members’ retirement savings will not be subject to unnecessary risks. When considering whether an investment should be permitted for MPF investment purposes, the MPFA attaches great importance to striking a balance between flexibility to achieve investment performance and safeguarding against avoidable risks such as liquidity, valuation, credit and concentration risks.

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While ensuring an appropriate degree of risk control, the MPFA has been expanding the MPF permissible investment universe to facilitate MPF trustees and the fund industry in providing more diversified retirement investment products to MPF scheme members. We have permitted certain gold exchange-traded funds since November 2011.

We included the Shanghai Stock Exchange and the Shenzhen Stock Exchange in the list of approved stock exchanges in 2020, and expanded the asset allocation and markets for real estate investment trusts in the same year. In June this year, legislative amendments were made to facilitate MPF investment in debt securities issued or unconditionally guaranteed by the central government, the People’s Bank of China and the three mainland policy banks.

The MPFA will continue to maintain close communication with stakeholders, including MPF trustees and the fund industry, to listen to their views on further improving the MPF system.

Cheng Yan-chee, managing director, MPFA