LEGCO WORK

Council Meetings (Oral Question): Optimize MPF Withdrawal Mechanism(2011.03.16)

Question on optimizing MPF withdrawal mechanism by KP Chan:

Since inception of the MPF system on 1 Dec 2000 and up to 31 Dec 2010, despite undergoing two financial crises in the last 10 years, the annualized average rate of return after deduction of fees and charges is 5.5%, whereas the increase of the annualized Composite Consumer Price Index during the same period is 0.7%. I would say that the MPF return is actually pretty good. Of course, there is a huge difference in return between conservative funds and high-risk funds such as equity funds. Obviously, all of us realize that there is no capital guarantee  and requires a longer investment period for high-risk funds to achieve a stable yield.

I would like to ask whether the Government has looked into optimizing the MPF system, such as allowing employees, upon reaching 65, to withdraw their MPF funds in phases, instead of the current requirement of withdrawal in a lump sum, so that the investment period can be extended even for employees approaching retirement age.

Pro. KC Chan, Secretary for Financial Services and the Treasury, confirmed that the Government is reviewing that issue.

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