MPF System

Background

Why MPF?

Importance of MPF

As Hong Kong's population is ageing rapidly, the future workforce will have to face the challenge of having to support a much larger number of retirees.

In year 2021, 20% of the population was aged 65 and over. By 2069 this is projected to rise to 35%. Each retiree was supported by 3.4 working age adults in 2021 and the number will drop to 1.7 by 2069. In addition, the life expectancy (at birth) of Hong Kong people was 83.2 for men and 87.9 for women in 2021, and will be 88.4 for men and 93.9 for women by 2069.

Hong Kong’s Ageing Population
In year 2021, 20% of the population was aged 65 and over. By 2069 this is projected to rise to 35%. Each retiree was supported by 3.4 working age adults in 2021 and the number will drop to 1.7 by 2069. In addition, the life expectancy (at birth) of Hong Kong people was 83.2 for men and 87.9 for women in 2021, and will be 88.4 for men and 93.9 for women by 2069.
Source: Census and Statistics Department, HKSAR Government

Development of the MPF System


The MPF System is set up to help Hong Kong’s workforce save up for their retirement. It is an important part of Hong Kong’s retirement protection framework.

The Mandatory Provident Fund Schemes Ordinance (MPFSO) was enacted in 1995 and supplemented by subsidiary legislation in 1998, 1999 and 2000 respectively. The MPF System was launched in December 2000.

World Bank’s multi-pillar retirement protection framework

 

Pillar Zero: non-contributory, publicly financed and managed system. Pillar One: mandatory, contributory and publicly managed system. Pillar Two: mandatory, privately managed, fully funded contribution system (MPF). Pillar Three: voluntary savings. Pillar Four: informal support, other formal social programmes, and other individual assets.

Source: Holzmann, R., & Hinz, R. (2005). Old age income support in the 21st century: An international perspective on pension systems and reform. Washington, DC: World Bank.

 

As the second pillar of Hong Kong’s retirement protection framework, MPF complements the other pillars1 and provides the workforce with basic retirement protection.

 

1 With the exception of Pillar 1 which is not applicable in Hong Kong.

Coverage of retirement protection

Before the implementation of the MPF System, only about one-third of Hong Kong’s workforce had some form of retirement protection.

 

With the implementation of the MPF System, around 85% of the workforce is covered under the retirement schemes listed below:

 

  • MPF schemes
  • Occupational Retirement Schemes (ORSO schemes)
  • Statutory pension or provident fund schemes (e.g. for civil servants or teachers of grant / subsidized schools)