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MPFA Chairman Mrs Ayesha Macpherson Lau published her latest blog post today (28 December), highlighting that Hong Kong’s status as an international financial centre is built on a solid foundation, featuring diverse products, quality services, a robust legal framework and sound regulatory systems. It has been a crucial cornerstone for the continuous development of the MPF System over the past 23 years since its inception on 1 December 2000. The MPF System is designed as an employment-based, defined contribution system, which is financially sustainable and does not impose a burden on public finance. Defined contribution retirement protection systems have gained increasing global recognition. To date, 41 jurisdictions worldwide have adopted similar systems. The number has increased by three times from 11 jurisdictions in 2000.

MPFA has always been actively engaged in international exchanges and cooperation.  This year MPFA representatives have participated in a total of 15 international and regional meetings, including the “Roundtable on Insurance and Retirement Savings in Asia” co-organized by the Organisation for Economic Co-operation and Development (OECD) and Asian Development Bank Institute in India, the International Organisation of Pension Supervisors (IOPS)¹ meetings and  IOPS/ OECD Global Forum on Private Pensions in Zimbabwe, to stay abreast of the latest international trends in regulating private pension systems.  In these meetings, MPFA was also invited to share the latest developments of the MPF System.

Mrs Lau said that one of the major reforms of the MPF System was the default investment strategy (DIS, also commonly known as “funds for lazy people”) initiated by MPFA. DIS is designed especially for those who are unfamiliar with investing or have no time to manage their MPF. DIS has three key features, including fee cap, globally diversified investment and automatic de-risking. Since its launch in April 2017, DIS has become a positive showcase in studies about default funds conducted by international organizations.

As at the end of September 2023, there were 3.05 million MPF accounts investing in DIS, representing a year-on-year increase of 10%.  For every ten MPF accounts, three invested in DIS. 

Total MPF assets invested in the DIS amounted to $94.7 billion, accounting for 9% of total MPF assets. The Core Accumulation Fund² and the Age 65 Plus Fund³ registered an average net return of 11.1% and 2.4% respectively in the past year. 

In addition, Mrs Lau added that the eMPF Platform is the most significant reform of the MPF System since its inception. Whenever the MPFA participates in international conferences, many participants show great interest in this project. When the Platform commences operation, the MPF System will become one of the first few private pension systems around the world that utilizes a centralized digital platform to manage pension scheme administration. The project will provide valuable experience and serve as a showcase of digitalization for other private pension systems. 

Mrs Lau said that the MPFA’s work is widely recognized, and MPFA had been re-elected as a member of the Executive Committee of IOPS. IOPS has also decided to hold its annual general meeting and working meetings in Hong Kong in 2026, and to co-organize the Global Forum on Private Pensions with OECD and MPFA. Representatives from 80 jurisdictions, together with other international organizations and local guests, will be invited, with an expected participation of 1,000 attendees. 

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

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28 December 2023

_{1. Established in 2004, IOPS is an international standard-setting body for pension supervisory issues with the objective of improving the quality and effectiveness of the supervision of private pension systems around the world. Currently, IOPS has 91 members and observers from 80 countries and regions worldwide.}

_{2. Core Accumulation Fund: 60% of the assets of the fund are invested in higher-risk assets (mainly global equities), and the rest are invested in lower-risk assets (mainly global bonds).} 

_{3. Age 65 Plus Fund: 20% of the assets of the fund are invested in higher-risk assets (mainly global equities), and the rest are invested in lower-risk assets (mainly global bonds).}