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The Mandatory Provident Fund Schemes Authority (MPFA) today (16 December) released a consultation paper seeking views from the public on proposals on the withdrawal of MPF benefits.

Speaking at a press conference, MPFA Chairman Anna Wu said, "The MPF System has been in operation for over 11 years. While attention was focused on the accumulation phase and the creation of an administratively reliable and efficient retirement system during the initial implementation stage of the MPF System, the decumulation phase is equally important and will become even more so as the System matures and the population ages.

"A working group therefore was set up under the MPFA Management Board earlier this year to review the withdrawal of MPF benefits and to refine this aspect of the System. The review signifies part of our continuous drive to enhance the System to make sure it remains in tune with the needs of society."

MPFA Non-executive Director and Chairman of the MPFA Working Group on Review of Withdrawal of MPF Benefits Rimsky Yuen said, "The proposals on the withdrawal of MPF benefits affect each and every member of the MPF System. These issues warrant broad consultation to gauge the views of the public."

The major issues for consultation include the following:

1. The mode of payment of MPF benefits

The MPFA proposes to allow flexibility and leave the choice to scheme members to withdraw their accrued benefits either in a lump sum or gradually ("voluntary staged withdrawal").

2. Additional ground for early withdrawal of MPF benefits

The MPFA proposes the introduction of an additional ground allowing early withdrawal if a scheme member is suffering from an illness which will likely reduce the member's remaining life expectancy (referred to as "terminal illness").

Mr Yuen said the proposal to allow staged withdrawal would foster a greater sense of personal responsibility and ownership of retirement benefits among scheme members, and also provide more incentives for the financial services industry to develop a range of retirement income products to meet different needs and create more competition to keep the costs of retirement income products at a reasonable level.

On additional grounds for early withdrawal, he said the MPF System was set up for one single purpose -- to provide retirement savings for the working population. He pointed out that for scheme members suffering from "terminal illness", the prospect of providing for an income after the age of 65 had lost its promise, and therefore, the need to preserve accrued benefits in MPF accounts for old age protection in such cases might no longer be relevant.

The consultation period commenced today and will last until 31 March 2012. The MPFA will review the responses received and fine-tune the proposals in the second quarter of next year with a view to submitting recommendations to the Government in the third quarter of 2012.

The consultation paper will be available at MPFA offices, Public Enquiry Service Centres at District Offices, Job Centres and Recruitment Centres of the Labour Department and Consumer Advice Centres of the Consumer Council, or can be downloaded from the MPFA website. Members of the public are welcome to send their views to the MPFA by post (Level 15, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong), fax (2259 8199), email (WDB@mpfa.org.hk) or online via the MPFA website. The MPFA has also set up a telephone line (1833 108) to record comments from members of the public on the consultation paper.


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16 December 2011