Average annual return of the MPF over the past ten years 5.5%

The Mandatory Provident Fund Schemes Authority (MPFA) said the recently released 10-year Investment Performance Review of the MPF System revealed that in the past 10 years, the MPF System recorded an annualized rate of return of 5.5% per year, after fees and charges, outperforming the average annual inflation rate (0.7% per year) and the one-month HK dollar deposit rate (1.0% per year) of the same period.

An MPFA spokesperson said that a total net amount of $277.52 billion was contributed to the MPF System during the period between 1 December 2000 and 31 December 2010, and that as at 31 December 2010, the total net contributions had grown to $365.44 billion. In other words, the System recorded an investment return of $87.92 billion.

"Despite the repercussions of the SARS crisis in 2003, and the global financial crisis in late 2008 and early 2009, the MPF System was able to weather the storm and generate positive returns to members' contributions over the 10-year period," the spokesperson added. "Most importantly, the System has established Hong Kong employers' responsibility for their employees' retirement protection and at the same time has helped employees plan for their own retirement."

Among the different types of MPF funds, equity funds achieved the highest returns, but were also shown to have the highest risk. By contrast, MPF Conservative Funds, which exhibited a lower level of risk, produced lower returns over the 10-year period. Nonetheless, all major types of funds recorded a positive annualized rate of return, beating the annual inflation rate (0.7% per year) over the period.

The MPFA hopes the Review will draw to scheme members' attention the strong relationship between risk and return of MPF funds - the higher the expected return, the higher the associated risk. Diversification across regions or asset classes tends to lower the investment risk. Furthermore, the fund choices made by members has an important impact on their saving outcomes, and accordingly, the overall return of the MPF System. Members should develop the habit of reviewing their MPF investments regularly in light of changing personal circumstances, such as risk tolerance level and years to retirement, and adjust their fund choices where appropriate.

The MPFA would like to stress that the MPF is a long-term investment. Scheme members should not be overly concerned about short-term return fluctuations. The MPFA will continue to devote resources to investment education to foster greater understanding of MPF investments and the System among scheme members and people of different age groups, and to assist scheme members in making informed MPF decisions that best suit their needs.

The 10-year Investment Performance Review of the MPF System has been posted on the MPFA website (www.mpfa.org.hk). The latest issue of MPFA Newsletter, which is also available on the MPFA website, carries a summary of the Review as well.

17 April 2011


Last Review Date: 23/05/2011