As Hong Kong’s Mandatory Provident Fund turned 20 this year, the retirement savings program notched up another notable landmark: a record HK$1 trillion (US$129 billion) in assets under management. Inevitably, perhaps, given the financial wrecking ball of COVID-19, there is a growing debate over how this hard-won haul can best serve the city’s workers in tough times.

Chief Executive Carrie Lam has previously dismissed the idea that employees should be allowed to make early withdrawals of funds, saying that the MPF is an important pillar of retirement protection. Launched in 2000, the compulsory retirement fund had 4.46 million members as of last December.

Some countries allow citizens to access their retirement funds during economic hardship, said Byron Tsang, an associate professor of economics at Virginia Tech. However, the Hong Kong government likely wanted to avoid setting a precedent, he said.

Earlier this year, Australia said it would let people withdraw A$10,000 (US$7,376) a year from their retirement funds to see them through tight spots. About 2.5 million people applied to withdraw cash in the first two months.

The Hong Kong government should look into letting MPF members pause their payments for a year, which would be an easier and more practical solution to help cash-strapped Hongkongers, Tsang said.

Law Ka-chung, an economics professor at the City University of Hong Kong, disagreed. The MPF is not meant to provide emergency funds, and the government should instead consider targeted spending to help workers cope with financial difficulties brought by COVID-19, he said.

Law also opposed a moratorium on contributions, saying that the move would represent a “fundamental change in principle.” If such a policy were to be repeated in future financial crises, it would affect the retirement planning of the working population, he said.

Apple Daily financial columnist Stock Wing said he got his first job at the time MPF was introduced, and now has more than HK$1 million in his retirement fund. However, he said he was dissatisfied with the lack of investment choices offered.

The government should introduce more index product options to the MPF, as well as funds that focus on the growing medical and technological sectors, he said.

He noted that the recent spike in emigration has also led to more Hongkongers accessing their MPF savings ahead of time. “It is good to have a few hundred thousand or a million, it can cover one’s living expenses abroad,” he said.

Click here for Chinese version

---------------------------------

Apple Daily’s all-new English Edition is now available on the mobile app: bit.ly/2yMMfQE

To download the latest version,

iOS: bit.ly/AD_iOS

Android: bit.ly/AD_android

Or search Appledaily in App Store or Google Play