Hong Kong Retirement Trends in 2020
The official retirement age in Hong Kong is 65 for both men and women and the pension system is based around a strong occupational pillar – the Mandatory Provident Fund Scheme (MPF). Recognised as the biggest change to Hong Kong’s pension policy over the last two decades, the MPF has been in place since 2000 and compliments a public pension pillar for the underprivileged and a third pension pillar that comprises voluntary pension savings.
The MPF is a compulsory saving scheme (pension fund) for the retirement of residents in Hong Kong. Most employees and their employers are required to contribute monthly to mandatory provident fund schemes provided by approved private organisations, according to their salaries and the period of employment.
Participation is mandatory for full and part-time employees between 18 and 65 years of age, provided that they’ve been employed for more than 60 days. Employers and employees contribute 5% of their wages each, up to a limit of HKD 20,000 a month. This also applies to the self-employed.
Hong Kong Retirement Trends
In the Shifting Sands Hong Kong report, it emerged that on average, working age people in Hong Kong expect to retire at age 63 compared to the global average of 61 and expect to live to age 80 compared to the global average of 81 – a retirement of 17 years compared to the global average of 20.
In terms of generational expectations, there is very little to distinguish between the ages that Millennials (61), Generation X (62) and Baby Boomers (65) expect to retire. The differences are more starkly reflected when retirement prospects are taken into account.
56% of people believe that Millennials have experienced weaker economic growth than previous generations and 59% agree that Millennials are paying for the economic consequences of older generations, especially the global financial crisis. When looking at life expectancy and retirement planning, 69% of people believe the Millennial generation will live (and thus need to support themselves) for much longer.
As with most other regions, property is viewed as the best way to save for retirement – 61% of working people in Hong Kong believe it offers the best returns. In reality, 47% of the workforce actually expect employer pension schemes to be their main source of funding.
Preferred Routes for Retirement Saving:
Property – 61%
Stocks and Shares – 55%
Cash Savings – 30%
Government Bonds – 25%
Personal Pension – 16%
Foreign Currency – 13%
Employer Pension Schemes – 12%
Buying a Business – 7%
The report also highlighted that while 44% of working age people believe they’ll need to move their money from savings into investments for the best returns during retirement, there isn’t a high appetite for risk amongst the Hong Kong workforce – 41% of people are willing to make ‘investments with risk’ but only 37% are willing to make an investment that risks financial losses.
Like most of our global regions, Hong Kong workers ideally want property investment as part of their retirement savings. As the most expensive property market in the world, it’s becoming increasingly common for Hong Kong residents to look overseas for their investments, using the high value of the HKD to find better deals in stable markets such as the UK.