The Mandatory Provident Fund Schemes Authority (MPFA) intends to raise the contribution cap for the city’s pension fund from HK$1,500 to HK$2,400 per month.
The change will be implemented in two steps. The maximum contribution will be raised from HK$1,500 to HK$1,950 a month in the first phase, and then up to HK$2,400 two years later.
For a couple who earn HK$48,000 or more each, the total contribution a month will amount to HK$9,600, including the employers’ input.
That translates to over HK$115,000 per year or HK$1.15 million in ten years.
This money can be used as a down payment for a home, if the pension fund scheme is not mandatory.
One can also choose to spend more when they are young, rather than saving that much for old age.
The MPF was set up to force employees to save for their retirement, in order to ease the government’s financial burden in terms of social welfare.
While Hong Kong has always been advocating free market mechanism and private ownership, it does not trust people can properly save for their retirement.
Although some argue that MPF should be regarded as a long-term investment, we should be free to decide whether we want to manage money on our own or pay annual management fees to MPF managers.
Hongkongers should also be free to decide whether they prefer to enjoy their life and do more traveling, for example, when they are still young, rather than saving all that money for the future, as MPF fund can’t be withdrawn until one reaches 65.
This article appeared in the Hong Kong Economic Journal on July 23
Translation by Julie Zhu
[Chinese version 中文版]
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