MPF Marks 25th Anniversary: Looking Ahead to Hong Kong’s Retirement Savings System
Since its implementation in 2000, it has evolved into a retirement security system covering 4.79 million members with total AUM (Assets Under Management) reaching HK$1.34 trillion. Through continuous reforms in recent years, particularly the full launch of the e-MPF platform this year, the system is projected to achieve efficiency gains and save HK$30-40 billion in costs over the next decade.
As the core pillar of Hong Kong’s multi-pillar retirement security framework, MPF not only plays a crucial role in addressing demographic aging challenges, but its market-oriented operational model has also become a benchmark for pension systems across the Asia-Pacific region. However, compared to advanced international markets, Hong Kong’s MPF still has room for improvement in areas such as investment diversity and long-term return performance.
Although Hong Kong’s per capita retirement assets remain below those of mature markets like the United States and Australia, they are growing steadily. Between 2020 and 2025, total MPF assets increased by 54% (from HK$868 billion to HK$1.34 trillion). According to an HSBC report, Hong Kong’s middle class requires approximately US$1.08 million in retirement savings, comparable to the United States.
The current MPF system operates under a plan-based model, requiring members to independently select funds. While this model fosters market competition and empowers choice, it also faces structural limitations such as limited investment options and high decision-making thresholds. Future reforms should enhance inclusivity through the e-MPF platform by streamlining processes and strengthening professional guidance. Simultaneously, drawing inspiration from the flexible approach of the ORSO (Occupational Retirement Schemes Ordinance), a more robust retirement security system can be built while maintaining market vitality, catering to the diverse needs of different groups.
Furthermore, as the primary retirement savings source for low-income groups, the multi-tiered retirement security system formed by the MPF scheme is particularly crucial. For high-income earners, however, the scheme’s protective role is relatively limited due to the monthly contribution cap of HK$3,000. Therefore, the system should balance universality and personalization to better adapt to retirement security needs within Hong Kong’s high cost-of-living environment. However, the current system lacks incentives for additional contributions. Beyond TVC (Tax-deductible Voluntary Contributions), the existing framework offers weak incentives for members to proactively increase their contributions.
The development of fintech and shifting financial attitudes among younger generations are driving global retirement planning reforms. Hong Kong’s regulators and financial institutions should balance traditional Asian cultural values with modern financial needs to promote both personal financial security and the sustainable development of the retirement system.
Currently, Hong Kong’s MPF system comprises two major schemes: accumulation and withdrawal. The accumulation scheme currently offers only over 300 APIFs (Approved Pooled Investment Funds), significantly fewer than the over 2,000 recognized public funds available. This necessitates expanding high-quality asset allocation while maintaining system simplicity. The withdrawal scheme urgently requires developing effective tools to convert savings into stable income. In response to population aging, reforms must establish a full-cycle solution to achieve dual objectives: personal retirement security and institutional stability.
Moving forward, the MPF must enhance the adaptability and targeting of its schemes to meet members’ diverse needs, while gradually refining the system to reinforce Hong Kong’s international financial standing.
