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MPFA blog - Tax Deductible Voluntary Contributions encourages scheme members to save early for retirement

Mandatory Provident Fund Schemes Authority (MPFA) Chairman Dr David Wong published his latest blog post on the MPFA website today (7 April). He said as the second pillar of the World Bank’s advocated multi-pillar retirement protection framework, the Mandatory Provident Fund (MPF) System is meant to provide basic retirement protection for scheme members through disciplined saving. But to strengthen its function, it has to be complemented by the other pillars including the third pillar, voluntary savings, he explained.

Dr Wong noted that awareness of enhancing retirement protection through voluntary contributions (VCs) has been rising gradually, which is reflected by the surge in VCs from $4.3 billion in 2008 to $11.6 billion in 2018. With the implementation of the Tax Deductible MPF Voluntary Contributions (TVC) on 1 April 2019, Dr Wong wrote that he believed scheme members would find the new measure a strong financial incentive to make additional MPF contributions and called on members to enroll as soon as possible.

In addition to explaining the characteristics of TVC, Dr Wong pointed out that the MPF is different from other investment products in the market. The MPF allows scheme members to invest in one or various MPF Funds in small amounts and to adjust their investment portfolio anytime. Furthermore, there is no buy-sell spread for MPF investments, and scheme members are not required to pay charges for transfers or redemptions. He concluded that the MPF System is a ready-made retirement investment tool and quite an attractive option.

For the full version of the article, please visit the MPFA blog. The blog is in Chinese only.

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7 April 2019

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Last Review Date: 04/04/2019