22 December 2020
MPF looks to end 2020 with a 2nd consecutive year of double digits returns
- Approximately $5,300 is expected to be added to member accounts in December and MPF account balances are forecasted to start 2021 at $251,200. An all time record.
- MPF system is expected to generate $23.66bn in earnings in December, lifting MPF to $1.12tr in size. Highest level ever recorded.
- Average monthly, quarterly, and annual MPF fund returns are expected to be 2.11%, 8.55% and 10.94% respectively. The 2nd consecutive year of double digits MPF returns.
MPF Ratings Ltd, an independent Mandatory Provident Fund (MPF) research specialist, is forecasting MPF member account balances to commence 2021 at an all time high (See chart 1). Bolstered by an expected December investment earning of $23.66bn, MPF Ratings expects the average account balance for MPF’s 4.46m members to be approximately $251,200 and the MPF system to record an all time high asset size of $1.12tr (Also see Chart 1) to start the new year. MPF Ratings has also forecasted that the MPF industry will generate an average monthly fund return of approximately 2.11% in December, taking total returns for the last quarter of 2020 to 8.55%, and annual returns to 10.94%, for a 2nd consecutive year of double digits MPF returns (see Table 1).
Chart 1: Average MPF account balance per member and MPF total assets
Source: MPF Ratings and MPFA
Table 1: Forecasted average investment returns by MPF asset class for December, 4th quarter and year-to-date of 2020
Source: MPF Ratings
In anticipation of the MPF account balance milestone, MPF Ratings’ Chairman Francis Chung (叢川普) commented that not only is the milestone a record but it is also a major springboard for meeting Hong Kong’s future retirement needs. “For MPF members it’s great news that their account balances will start 2021 at an all time high, especially after a year of almost unprecedented volatility. The growth in MPF assets speaks positively for the robustness of the MPF system and the determination of Hong Kong workers to save for their retirement. A record MPF savings pool of approximately $1.12tr and an average member account balance of around $251,200 will go a long way to improving the lives of Hong Kong’s working population in retirement.”