Hong Kong’s pension scheme earns higher grade, still lags behind Singapore’s
The city’s US$193 billion compulsory retirement scheme improves to a B from a C+ in Mercer’s index, thanks largely to strong returns
Hong Kong’s pension scheme improved its overall adequacy, sustainability and integrity over the past 12 months, rising from a C+ grade to a B – equal to schemes in some European countries but still trailing Singapore’s – according to a report released on Wednesday.
The HK$1.5 trillion (US$193 billion) Mandatory Provident Fund (MPF) scored 70.6 points out of a possible 100 in the annual Mercer CFA Institute’s Global Pension Index, up from 63.9 last year.
The programme now holds the third-best grade worldwide, tied with the retirement schemes in Belgium, France, Germany and Switzerland. The report has seven grade levels: A, B+, B, C+, C, D and E.
Mercer said the MPF recorded the largest improvement among all Asian schemes, rising thanks to “a member-centric approach that emphasises sound investment strategies and robust risk management”.
But while the MPF had “a sound structure with many features”, it had “some areas for improvement that differentiate it from an A-grade system”, the report said.
“The MPF is a sound retirement savings system that plays a vital role in enhancing basic retirement protection for the working population in Hong Kong,” a spokesman for the Mandatory Provident Fund Schemes Authority (MPFA) said on Wednesday.