Hong Kong, one of the world's longest-living cities, presents significant financial challenges for retirees. A research report released on Wednesday (June 3) found that retirees would need savings of up to HK$7.1 million to achieve a 90% confidence level of long-term financial security.
The report recommends that the government strengthen the city's retirement protection system by expanding tax incentives for Mandatory Provident Fund (MPF) contributions, increasing the issuance of dedicated Silver Bonds and local infrastructure bonds, among other measures.
Some residents who have begun preparing for retirement described the suggested savings target as an "astronomical figure," saying it would be difficult to accumulate such wealth and expressing hopes that the government would further improve retirement protection. Meanwhile, some retirees argued that a comfortable retirement cannot rely solely on government support and stressed the importance of early financial planning.
The Hong Kong Retirement Schemes Association released the report, titled "Empowering the Workforce, Strengthening Retirement Protection", on Wednesday.
Using data from the Census and Statistics Department and the Consumer Council, the study estimated baseline retirement spending at HK$20,000 per month. Based on a retirement age of 65, a male retiree with a life expectancy of 86 would require approximately HK$4.6 million to maintain baseline living expenses. For women, whose life expectancy is projected to reach 90, the required amount rises to HK$5.4 million.
To achieve a 90% confidence level of financial security, the report assumes that men should plan for retirement through age 97 and women through age 100. Under these assumptions, men would need savings of HK$6.6 million, while women would require HK$7.1 million.
The report noted that population ageing combined with rising living costs has made retirement planning increasingly challenging.
The survey also covered companies in HK collectively employing more than 90,000 workers. It found that many employers contribute between 8% and 15% of employees' salaries to retirement schemes, exceeding the statutory 5% contribution requirement. Some employers have even removed contribution caps altogether.
Researchers said active employer participation can improve employee engagement and retention, although voluntary retirement contributions remain relatively low among younger workers.
Residents say savings goal is out of reach
However, many residents said the recommended savings targets are far beyond their reach.
Mr. Leung, 51, told Ta Kung Pao that he had previously maintained a retirement savings plan. However, after seeing several friends pass away unexpectedly due to illness in recent years and amid economic uncertainty, he has become less focused on long-term financial targets.
"Saving several million dollars is an astronomical goal for many people," he said. "Voluntary contributions ultimately come out of workers' own pockets. A universal retirement protection system would be more practical."
Ms. Tong, 60, had originally planned to retire early this year but said she was shocked after reading the report.
"Not to mention HK$7.1 million—even HK$5.4 million is impossible for me to save," she said, adding that she lacks confidence about retirement and is considering returning to work to cover future expenses.
She also noted that the current 5% MPF contribution level is insufficient to support retirement, especially when healthcare costs are taken into account, leaving many retirees with little choice but to live frugally.
Retiree Ms. Cheung said the current MPF system provides limited support for retirement security.
"Since my twenties, I have purchased multiple savings and investment-linked insurance plans to secure my future, which has allowed me to enjoy retirement. I have also purchased government annuity products," she said.
She added that whether HK$7.1 million is sufficient depends on individual circumstances and may not be enough for her. A comfortable retirement, she argued, requires personal planning and savings rather than reliance on government assistance alone.
Report calls for tax incentives and expanded retirement products
To further strengthen retirement protection for HK's workforce, the Hong Kong Retirement Schemes Association and its research partners proposed three major policy initiatives.
First, they suggested promoting voluntary retirement savings through enhanced incentives, including establishing separate tax-deduction limits for Tax Deductible Voluntary Contributions (TVC) and Qualifying Deferred Annuity Policy (QDAP), as well as introducing separate TVC tax allowances for dependent family members.
Second, the report advocates a more diversified retirement income framework. Recommendations include expanding the issuance of dedicated Silver Bonds and local infrastructure bonds, while launching pilot programmes based on cooperation among the government, businesses and community organizations. These programmes would combine lifelong annuity products with long-term care and preventive healthcare services.
Third, the report calls for empowering employers to strengthen workplace-led retirement support. Suggested measures include introducing flexible supplementary contribution structures to attract, retain and facilitate the mobility of experienced international executives, enhancing coordination between employers and regulators, improving benefit transfer mechanisms, and streamlining the management of unclaimed retirement benefits.
(Source: Ta Kung Pao)
Related News:
MPF gains HK$3,500 on average in July as total assets surpass HK$1.45 tn
Comment