Allow Riskier MPF Investments, Working Group Says

A government advisory group has suggested allowing MPF trustees to put savers' money into risker investments as part of a push to improve Hongkongers' retirement incomes.

The Financial Services Development Council also says employees are clearly not investing enough in their compulsory savings accounts to fund a viable retirement life.

A working group tasked with reviewing the MPF system has also backed the government's idea of introducing tax incentives to encourage people to put more money into their Mandatory Provident Fund accounts – despite concerns about what some see as high management fees.

A research report released by the working group on Thursday recommended that MPF trustees be allowed to provide investment products with higher risks and returns. One suggestion is to allow investment in all funds approved for sale to the public by the Securities and Futures Commission.

Working group member Marie-Anne Kong said: "As a first step, we discussed whether all SFC-authorised funds, which are actually available to all the retail public, could potentially be made available for MPF.

"The public can invest in it, so potentially MPF-scheme members could also invest in it, as opposed to trying to create a separate pool."

It also calls for the setting up of a centralised online platform so people can manage their MPF accounts more easily.

The council says not many people are willing to put extra money into their MPF accounts on top of their mandatory contributions of 5 percent of their income, which is capped at HK$18,000 per year, because of what they see as high management fees and low returns.

People can claim tax deductions for their mandatory MPF contributions. The working group is proposing that employees' voluntary MPF contributions should also be tax deductible.

It says the total tax deductions should be capped at 15 percent of their income.

The leader of the working group, Florence Yip, said she hopes the initiative would encourage people to put more money into their MPF accounts before they retire.

The MPF system has been running for almost 20 years now and the total amount of money in Hong Kong people’s MPF accounts reached HK$858 billion as of September last year.