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Enjoying a comfortable retirement life is a common aspiration among employees. Many individuals are concerned about whether their retirement savings, including their MPF, will be sufficient to cover their living expenses during retirement.

The MPF System has been implemented for over 24 years, serving as a vital pillar of basic retirement protection for Hong Kong’s workforce. As of the end of 2024, there were 125,000 MPF accounts with $1 million or more, doubling from five years ago. 90% of these accounts were held by scheme members aged 40 or above, and 27,000 MPF accounts have accumulated $2 million or more.

Gradually accumulating retirement savings 

Through dollar-cost averaging and the compounding effect, the MPF helps employees gradually accumulate retirement reserves. By making additional voluntary contributions, the cumulative effect of the MPF will be even more significant. 

An analysis of a set of accounts with continuous contributions since the inception of the MPF System in December 2000 shows that the average MPF accumulated through mandatory contributions is $500,000. 30% of these accounts also include voluntary contributions, averaging $520,000 per account.   

Voluntary contributions: a key factor in increasing retirement reserves

Assuming two scheme members who both earn the current median monthly income of $20,500, with salary growth projected in line with long-term trends. It is assumed that going forward the two scheme members will invest their MPF in the default investment strategy (DIS), commonly called “funds for lazy people”, which automatically adjusts the mix between higher- and lower-risk assets from age 50 onwards to mitigate investment risk. The following projections are made based on the performance of the funds under DIS since its launch, namely the Core Accumulation Fund (annualized net return rate of 6.5%) and Age 65 Plus Fund (annualized net return rate of 2.4%):

• Scenario 1: If only mandatory contributions are made going forward, the estimated total MPF accumulated upon retirement at the end of 2040 would be $1.69 million.

• Scenario 2: With both mandatory contributions and additional voluntary contributions at 10% of relevant income, the projected total would reach $3.4 million at the end of 2040, which is $1.71 million higher than that in Scenario 1.

The MPFA encourages employees to review their MPF investment portfolios regularly based on their stage of life and financial objectives. It is never too late for scheme members to start making voluntary contributions, even at the mid-career stage. Using Scenario 1 as an example, although that scheme member had made only mandatory contributions previously, starting to make voluntary contributions at 10% of the relevant income from this year onwards is projected to have a total balance would be $2.36 million by retirement at the end of 2040, an increase of $670,000 compared to continuing with mandatory contributions alone.

The above projection is only for illustrative purposes. The actual accumulation will depend on the scheme member’s contribution period and investment choices. We encourage scheme members to start planning early and leverage the MPF System’s advantages to build a solid foundation for basic retirement protection. By making voluntary contributions, members can significantly increase their retirement reserves and enjoy greater financial security in their later years.