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The 4.75 million members of Hong Kong's Mandatory Provident Fund (MPF) enjoyed a 13 per cent increase in their pension assets in 2024 thanks to the best investment returns in four years.
The MPF earned a combined HK$102.4 billion (US$13 billion) last year, equivalent to HK$21,500 for each member, according to data from MPF Ratings, an independent research firm.
The 379 MPF investment funds generated an average return of 8.8 per cent for the year, compared with a 3.5 per cent gain in 2023 and a loss of 15.7 per cent in 2022. This is the best annual return since an 11.4 per cent gain in 2020.
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The strong results boosted the MPF's total assets to HK$1.29 trillion. The sum, which takes into account investment gains and new contributions from members, works out to HK$271,500 per member. This is 13 per cent higher than a year earlier, indicating an average portfolio increase of HK$31,600 per member.
Pedestrians walk on a pedestrian bridge during lunchtime in Central on August 16, 2024. Photo: Xiaomei Chen alt=Pedestrians walk on a pedestrian bridge during lunchtime in Central on August 16, 2024. Photo: Xiaomei Chen>
"2024 has been a productive year for investors," said Mark Konyn, chief investment officer with AIA, one of the major MPF providers. "Reducing inflation and positive overall returns have supported the growth of retirement savings."
The strong performance of the MPF last year shows the benefits of the pension scheme, said Cheng Yan-chee, managing director of the Mandatory Provident Fund Schemes Authority.
"The MPF's performance reflects its resilience and stability over the years," Cheng said. "MPF scheme members are encouraged to make use of the merits of the MPF system that provide funds in different markets and asset classes, review their MPF investments regularly and build a diversified investment portfolio to mitigate investment risks."
He urged members to take a long-term view of their MPF investments because they will only need it decades later when they retire.
"MPF scheme members should not view the MPF from a short-term investment perspective, nor attempt to time the market, as this could lead to losses from buying high and selling low," he added.
Established in 2000, Hong Kong's MPF is a compulsory retirement scheme that gathers monthly contributions from employers and employees, representing up to 5 per cent of the employee's monthly salary.