Hong Kong: The Compulsory Provident Fund (MPF) of Hong Kong, which has helped the city's pension system maintain its ranking as the second best in Asia after Singapore, has improved its overall adequacy, stability and integrity over the past 12 months. has done. Iceland once again took the title at the world level.
The city's HK$965 billion (US$123 billion) compulsory retirement program scored 64.7 out of 100 on the Mercer CFA Institute's annual Global Pension Index, up from 61.8 in 2021.
Singapore's Provident Fund raised its rating from 70.7 to 74.1 and Pension Fund of Malaysia, which was ranked third, collected 63.1 instead of 59.6 in 2021.
In this year's ranking of 44 global pension systems, Iceland, the Netherlands and Denmark came first, repeating as the top three from 2021, according to the report released by the consultancy on Tuesday.
According to Janet Lee, Asia's wealth leader in Hong Kong for Mercer, Hong Kong has improved significantly since 2018, when its adequacy score was very low.
He cited the city's low minimum contribution level compared to other programs in the region, as evidence that there is still room for improvement.
According to Mercer, the Global Pension Index, the 14th in the series, compares each retirement income system to more than 50 indicators, using sub-indices for adequacy, stability and integrity. 40, 35, and 25 percent of the total are used as weights, respectively.
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When the MPF was first included in the annual study in 2018, Hong Kong had an overall score of 56. This year, it is much higher. The sub-index for adequacy rose the highest since that time from 39.4 to 61.5 points.
A tax deduction of up to $60,000 can be claimed for 2020 government incentives for voluntary contributions or annuity plans.
According to market analyst MPF Ratings, MPF's net worth stood at HK$965 billion this year, compared to HK$813 billion four years ago.
The report showed that while the current adequacy score exceeds the Asia average of 50.8 points, it is still well below the global average of 65.7.
Employers and employees must each contribute an equivalent of 5% of the monthly salary under the MPF scheme, up to a combined limit of HK$3,000 (US$382) per person.
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This is significantly lower than the 23 percent allowed in Malaysia and the 37 percent allowed in Singapore for contributors up to 55 years of age.
