Mandatory Provident Fund in Hong Kong

Introduction

Hong Kong, like many other places in the world, has a rapidly ageing population. The current demographic trends suggest an imminent surge in the number of retirees without retirement protection, calling for more and more public money to relieve their plight. If assistance to the retired poor is not automatic, great human suffering will ensue and the government cannot afford to bear the cost of the resultant social unrest. Apparently, the need for retirement protection is not in dispute. But the form of such protection has been debated for years. This project examines the three most important options, namely the Central Provident Fund (CPF), the Old-Aged Pension Scheme (OPS), and the Mandatory Provident Fund (MPF). The examination in light of rate of return, stability and sustainability, equity, coverage, political attractiveness and effect on economic growth finds that MPF is a suitable, if not optimal, option to Hong Kong. Following a brief description of the MPF syste...