A report from the Hong Kong Retirement Fund Schemes Association (PSA), prepared in collaboration with Ernst & Young Advisory Services Ltd., reviews the 25-year development of the Mandatory Provident Fund (MPF) system. The report calls for collaborative efforts from the government, trustees, employers, and members to enhance the adequacy of long-term retirement protection. Key recommendations include conducting regular reviews of the current mandatory contribution rates, further encouraging additional voluntary contributions—particularly among low-income groups—and promoting greater product innovation. This innovation could involve introducing new asset classes and supporting solutions that provide sustainable post-retirement income. The report also emphasizes leveraging digital platforms, such as the eMPF platform, and artificial intelligence tools to improve administrative efficiency and enhance the retirement planning experience.
The report highlights that the MPF system provides a solid foundation for retirement security and encourages active employee participation in retirement planning. Before the MPF's introduction, only about one-third of employees had retirement coverage. Currently, the participation rate for employers and employees has reached 100%, while the rate for self-employed individuals stands at 89%. Participation rates are a crucial indicator of the pension system's usage and future trends.
As of September 2025, the total MPF asset size has surpassed HKD 1.5 trillion, representing a 130% increase compared to a decade ago. This growth demonstrates the system's ability to help members accumulate substantial retirement savings during their working years. The social effectiveness of the MPF system continues to improve, strengthening the long-term financial responsibility of the public. The net income replacement rate for MPF rose from 34.1% in 2011 to 41.5% in 2022, indicating improved income security for retirees. Prior to the MPF's implementation, over 40% of elderly individuals had incomes below the social security level; the situation of elderly poverty has since improved. By enabling individuals to accumulate retirement savings, the MPF system helps citizens meet their financial needs in retirement.
Steady and continuous MPF contributions inject long-term capital into the financial markets, supporting the development of multi-currency and innovative financial products. Furthermore, the number of MPF fund choices has increased from 299 in 2001 to over 370 in 2025, providing members with a wider range of investment options. Diversified currency allocation helps enhance long-term investment returns for members across different market cycles.
Investor education is identified as a critical foundation for the long-term success of the MPF. As many members rely on their MPF as a primary savings source for retirement expenses, there is a need for simplified tools and clear planning guidance. Additionally, while a majority of members prefer lump-sum withdrawals of their MPF funds, many lack concrete plans for utilizing these funds. This highlights a market need for more education on post-retirement income solutions and the withdrawal phase.
PSA Chairman Chen Yuxun stated that the MPF system has not only helped millions of citizens build a robust retirement foundation but has also elevated public financial awareness and strengthened Hong Kong's status as a global financial hub. Looking ahead, continuous improvements to the system are necessary across various sectors, including raising contribution levels, expanding investment choices, and providing members with clearer guidance and innovative solutions. The PSA pledges to maintain close collaboration with policymakers, regulators, and industry partners to ensure the MPF system remains robust, inclusive, and sustainable for years to come.