MPF set to add another $31bn in earnings after surpassing $1 trillion for the first time ever

31 August 2020

MPF research specialist expects an average of $7,000 will be added to the accounts of MPF’s 4.46m members.

MPF Ratings Ltd, an independent Mandatory Provident Fund (MPF) research specialist, today announced that it expects MPF’s 4.46m members will see their retirement wealth grow by an average of approximately $7,000 in August as global financial markets continue to rebound.  MPF Ratings has forecasted that the MPF industry will generate an average monthly fund return of approximately 2.91% (see Table 1) in August, adding the equivalent of approximately $31bn in earnings to Hong Kong’s MPF system, which was recently reported to have surpassed $1 trillion for the first time ever.

Table 1: Forecasted August and Year-to-Date Average Investment Returns By MPF Asset Class

Source: MPF Ratings

MPF Ratings also expects that once contributions are taken into account average member account balances will also exceed last month’s level of $231,000, further consolidating the $1 trillion milestone, which according to MPF Ratings’ Chairman Francis Chung (叢川普), is not only a major numeric milestone but also a major step towards meeting Hong Kong’s retirement needs. “MPF took two decades to reach $1 trillion (see Chart 1), and while there were some bumps along the journey, a savings pool of $1 trillion goes a long way to improving the lives of Hong Kong’s ageing population and is incredibly valuable,” stated Mr Chung before adding, “This is especially so when recent events continue to place enormous pressure on individuals’ earning and savings capacity, so it’s pleasing to see the MPF industry consolidate its record size with an additional $31bn in forecasted earnings.”

Chart 1: MPF cumulative and annual asset changes since inception

Source: MPF Ratings

While pleased to see the MPF industry and average account balances at record levels, Mr Chung did offer a note of caution, “With MPF member account balances at record levels doubtless members will be pleased. But as an industry this is no time to be complacent, rather it’s an ideal opportunity to educate and promote the importance of saving for retirement for all, regardless of age and circumstances.  Too often MPF is propagated as being for ‘Hong Kong’s 3m workers’, but that understates the MPF landscape. Officially there are in fact 4.46m* MPF scheme members.  The point is not just one of accurate reporting, but also that, as a platform MPF can be and is used broadly. MPF is a far reaching savings platform, and one that can be leveraged to emphasize better saving, investing and retirement disciplines.”

*Source: MPFA’s Mandatory Provident Fund Schemes Statistical Digest June 2020

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