Mandatory Provident Fund in
Hong Kong
Presented by group 2
Year
Percentage of elderly age
1981
6.6 %
2001
11.2%
2031
24%
年齡
組別
1991
1996
2001
數目
佔總計的百
分比
數目
佔總計的百
分比
數目
佔總計的百
分比
1 151
916
20.9
1 151
038
18.5
1 109
417
16.5
15 - 24 839 841
15.2
869 511
14
920 445
13.7
25 - 34
21.4
1 188
424
19.1
1 108
529
16.5
35 - 44 891 032
16.1
1 178
522
19
1 360
487
20.3
45 - 54 487 658
8.8
683 569
11
960 417
14.3
55 - 64 491 506
8.9
516 937
8.3
502 042
7.5
0 - 14
1 178
288
65+
482 040
8.7
629 555
10.1
747 052
11.2
總計
5 522
281
100
6 217
556
100
6 708
389
100
Source http://www.censtatd.gov.hk/major_projects/2001_population_census/main_tables/
population_by_age_group_1991_1996_and_2001/index_tc.jsp
Old-Age Crisis
Three-pillar approach
-Public
-Personal
-Mandatory
-Voluntary
Before MPF, only 1/3 workforce
had retirement protection
Implement of MPF, close to 90% workforce
enjoy retirement protection
Implemented on 1 Dec 2000
Coverage
Between 18-65 are required
Includes full-time and part-time
(employed 60 days or more under a contract )
Self-employed workers
exemptions
•
•
•
•
Grant or subsidized school teachers
domestic employees
self-employed hawkers
people which covered by statuary pension or
provident fund such as civil servant
• People who entered Hong Kong less than 13
months or covered by overseas retirement schemes
• employees from the European Union Office of
European Commission in Hong Kong
Contribution:
the contribution amount is compulsory
equal to 5% + 5% of salary. :
• Contribution range
– >=$5000 , <=20000
• the contribution will be fully paid and
including the return of their contribution.
Withdrawal
Special circumstances
1. Death
2. Early retirement reaching age 60
3. Permanent Departure from HK
4. Total incapacitation
5. A small balance account in an MPF
scheme
The Protection of MPF
•
•
•
•
Stringent approval and registration criteria
Trust Arrangement
Professional indemnity Insurance
Compensation Fund
Guaranteed Fund
HSBC
Guaranteed Fund
• Launch date: 01.12.2000
• Fund Size: HK$5,049.39(Since 30.06.2006)
• Investment Time Frame: Short to medium term
• Fund Type: Guaranteed fund
Guaranteed Fund
Objective:
• To achieve long-term growth with low volatility
while preserving underlying capital.
Guaranteed Fund
Typical Asset Allocation:
• Equities 0-50%
• Bonds 20-100%
• Cash 0-80%
Guaranteed Fund
• Guaranteed Interest Rate:
• 1 July 2005 to 30 June 2006 0.25% p.a
• 1 July 2006 to 30 June 2007 0.25% p.a.
Guaranteed Fund Portfolio allocation
Cash & deposits
16%
USD bonds
8%
Hong Kong bonds
62%
Hong Kong equities
14%
Singapore equities
0%
Balanced Fund
HSBC
Balanced Fund
Objective:
• To achieve medium-high capital growth with
medium volatility through a pooled investment
fund that indirectly invests in global bonds and
equities with a heavier weighting in equities.
Balanced Fund
• Launch date: 01.12.2000
• Fund Size: HK$8,259.57(Since 31.07.2006)
• Investment Time Frame: Medium term
• Fund Type: Mixed Assets fund[Global]
Balanced Fund
Typical Asset Allocation:
• Equities 55-85%
• Bonds and cash 15-45%
Balanced Fund Portfolio allocation
European equities
14%
Australian equities
4%
Asia equities
6%
American equities
14%
Cash & deposits
4%
World bond ex US
18%
USD bonds
5%
Hong Kong bonds
1%
Japanese equities
12%
Hong Kong equities
22%
Growth Fund
HSBC
Growth Fund
• Launch date: 01.12.2000
• Fund Size: HK$8,669.17(Since 30.06.2006)
• Investment Time Frame: Medium term
• Fund Type: Mixed Assets Fund [Global]
Growth Fund
Objective:
• To achieve investment returns which
maximize long-term capital growth
potential with medium-high volatility. The
fund invests in a pooled investment fund
that indirectly invests in global equities,
with an emphasis on Asian markets.
Growth Fund
Typical Asset Allocation:
• Equities 70-100%
• Bonds and cash 0-30%
Growth Fund Portfolio allocation
World bond ex US
6%
European equities
19%
Australian equities
5%
Japanese equities
15%
Asia equities
7%
American equities
17%
Hong Kong equities
29%
Cash & deposits
2%
Guaranteed Portfolio
AIA
Guaranteed Portfolio
• Launch date: 01.12.2000
• Fund Size: HK$1,279.36(Since 31.07.2006)
• Investment Time Frame: Short to medium term
• Fund Type: Guaranteed fund
Guaranteed Portfolio
Objective:
• To minimize capital risk in Hong Kong
dollar terms.
• To achieve a stable, consistent and
predictable rate of return.
Guaranteed Portfolio Asset Allocation
Net Liquidity
8%
Hong Kong
Dollars Bond
92%
Balanced Fund
AIA
Balanced Fund
• Launch date: 01.12.2000
• Fund Size: HK$1,207.63(Since 31.07.2006)
• Investment Time Frame: Medium term
• Fund Type: Mixed Assets Fund
Balanced Fund
Objective:
• To maximize long-term capital appreciation
in Hong Kong dollars terms within
moderate risk parameters.
• To outperform Hong Kong price inflation
over the long term.
Balanced Portfolio Asset Allocation
Net Liquidity
5%
Other Bonds
40%
Hong Kong Dollar
Bonds
7%
Europe Equities
10%
Hong Kong Equities
14%
Japanese Equities
8%
United States Equities
7%
Other Asia Equities
9%
Growth Fund
AIA
Growth Fund
• Launch date: 01.12.2000
• Fund Size: HK$2,981.74(Since 31.07.2006)
• Investment Time Frame: Medium to long term
• Fund Type: Mixed Assets Fund
Growth Fund
Objective:
• To maximize long-term capital appreciation
in Hong Kong dollar terms.
• To outperform Hong Kong salary inflation
over the long term.
Growth Portfolio Asset Allocation
Other Bonds
10%
Net Liquidity
1%
Hong Kong Dollar
Bonds
2%
European Equities
18%
Other Asia equities
14%
United States Equities
15%
Japanese Equities
13%
Hong Kong Equities
27%
Guaranteed, balanced and
growth funds
Guaranteed Fund
AIA
HSBC
• the portfolio of the funds can be different
even their name are the same, so called
guaranteed fund.
Guaranteed Fund
•
Due to the difference in allocation, their rate of return will also be affected
•
not only come from the rising interest rate, but also from the stock market
fluctuation
Period return
%
00-01
01-02
02-03
03-04
04-05
AIA
HSBC
3.77
-2.4
2.08
1.5
1.5
1.92
Annualized rate
% 2006
AIA
HSBC
1 year
2.00
2.26
5 year
1.83
0.37
Since launch
2.22
-0.10
Last year 2005
2.00
-1.73
-0.41
0.21
0.21
-0.41
Source from HSBC and AIA fund fact sheet Sep, 3quarter 2006
Balanced fund
AIA
HSBC
•
•
This diversifies some risks from the volatility of stock market when it in a
climate of contrasting economic currents, cooling growth and highly inflation.
we have to aware that equity investment is much risky than the bonds. The
investors of HSBC have to bear the extra 35% risky than AIA ’s investors.
• AIA generated 1.83% above average, but HSBC is 0.37.
• AIA WIN
Growth fund
•
Because of their similarity, we are able to compare which fund manager are
performed better.
•
the past performance of them can be very different although they have a
similar allocation percentage.
Period return over 2000-2006
Return of HSBC vs AIA
30
20
%
10
0
-10
00-01
01-02
02-03
03-04
04-05
05-06
-20
HSBC
-30
AIA
Period
•HSBC tends to be fluctuating over time to time, especially in the early
year 2001-2003.
•This implied that HSBC ‘s fund portfolio poorly took advantage of
diversification
Which funds should I choose?
• whichever funds we are chosen is depended on
your the degree of risk you can bear.
• The simple way to test how much you can bear is
100 minus your current age
• it is employers to determine which MPF service
provider should be chosen, not the employee.
Source from HSBC and AIA fund fact sheet Sep, 3quarter 2006
The Effectiveness of
the MPF
1) The return of MPF is
uncertain.
• a) 跌市累強積金上月蝕2.2% ( 太陽報 2006-0612 19:00:25)
“【太陽】股市逆轉，股民遭殃之餘，投資股票
基金比重大的強積金（MPF）亦受無妄之災..”
• b) 強積金連續兩月虧損 (太陽) 07月 13日 星期
四 03:00AM “【太陽報專訊】強積金(相關新聞
- 網站)（MPF）連續兩個月錄得虧蝕, 六月份
強積金平均回報為負0.3%.....”
http://hk.news.yahoo.com/060612/197/1opgx.html
1) The return of MPF is
uncertain.
• Investment on bonds can have stable but less
return.
• The return of investing on shares in MPF’s
portfolio which is highly affected by the stock
market.
• Different distribution of investment in different
portfolio can give different return to the
contributors.
• the return is monitored by the personals factors.
So, the return is uncertain.
2) Insufficient return for low income
people.
HSBC
Hotline2238 0088
Press 1Press 2
Inflation rate
Returned rate
Year to Start
Contribution per
month
Retired Age
Assumed saving
Return
Year to enjoy
return
Return per month
2%
3%
25 years old
$1000(employers’) +
$1000(employees’)
65 years old
$0
$1,896,000
15 years (until 80 years old)
$5000
• reach ceiling
• $2000 contribution per month
• Only target for high income people
At 65 years old retired.
Only used for 15 years
Every month $5000
• For the Hong Kong Census and Statistics
Department on No. of domestic households
by monthly household income and
household size released at 23rd November,
2006, it state out that about 46% of
employees have average salary $7340$11560 per month.
Example:
Refer to Excel
• insufficient return
• Real lifethe inflation factor will
decrease our future income.
• insufficient to cover most of the
employees in Hong Kong to provide them a
stable retiring life.
3) It has less benefit to the short time
contributor.
4) The improvement of scheme hasn’t
widely made.
• Future Trend• “強積金供款入息上限，擬由２萬增至３萬元 (經濟通)
08月 28日 星期一 08:31AM
• 積金局(相關新聞 - 網站)現正研究，擬把強積金(相關
新聞 - 網站)（ＭＰＦ）供款入息上限由現行的２萬元
增至３萬元，此舉將令僱員與僱主每月最高供款，由
現時的各供１０００元增至１５００元，即僱主一年
最多為員工額外供款６０００元，市料有逾７５萬名
僱員受影響，當中牽連最大者是金融、會計等專業人
士。積金局諮詢委員會主席周永新(相關新聞 - 網站)教
授透露，擬向政府建議把僱員的入息供款上限由２萬
元增至３萬元，惟當局會否接納，相信最終是政治決
定。而積金局發言人接受查詢時拒就此作回應。《香
港經濟日報》
http://hk.news.yahoo.com/060828/74/1s12l.html
• enlarges the ceiling
• But only targets the professionals with
high income people.
• But how about the low class? It seems to
show the government’s improvement is
incompletes.
Recommendation
Method 1:
•  contribution %
– By law
– Voluntary
beneficial to more people
Method 2:
• Supplementary plan
– Aggressive
i.e. investment
• Stock
• Foreign currencies
• Funds
Method 2: (Cont’d)
• Supplementary plan
– Conservative
i.e. saving
•
•
•
•
Time deposit
Gold coins
Gov. bonds/ bank shares
Annuity
Member List:
•
•
•
•
•
Cheang Wai Sun, Alexander
Cheng Fu, Kelvin
Cheng Hoi Ling, Sue
Lam Tai Chuen, Ivan
Chan Wai Sze, Phyllis