LCQ10: Reverse mortgages and withdrawal of Mandatory Provident Fund contributions for home purchase
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Question:
Recently, I, together with representatives of The Hong Kong Mortgage Corporation Limited (HKMC), have organised a community talk on "Wills and Reverse Mortgages" to promote early retirement planning and legal knowledge of estate inheritance among the public. During the session, many members of the public have expressed keen interest in the "Reverse Mortgage Programme" (RMP) of "housing-for-pension", and the demand for reverse mortgages is particularly high among those who do not intend for their children or family members to inherit their owner-occupied property upon their death. In addition, many members of the public have further inquired why the Government does not allow them to use their Mandatory Provident Fund (MPF) contributions to purchase their first home, so that they can buy their own home during a property price downturn and use the property for a reverse mortgage in their old age, thereby ensuring a comprehensive and adequate retirement protection. In this connection, will the Government inform this Council:
(1) of the expenditure and manpower allocated in each of the past three years to promote the "Retire 3" Programme operated by HKMC (i.e. the HKMC Annuity Plan, the RMP and the Policy Reverse Mortgage Programme) (set out by year and plan/programme); the results of the promotional efforts; whether performance indicators have been established for such promotional efforts;
(2) as there are views that reverse mortgages have not yet gained popularity in Hong Kong, whether the Government has studied the underlying reasons;
(3) whether it has studied if allowing members of the public to use MPF contributions for first home purchases, thereby enabling them to "reverse-mortgage their homes" upon retirement, can help develop the reverse mortgage market and alleviate the Government's burden in meeting the housing needs of the elderly; if such studies have been conducted, of the findings; if not, whether the Government can commence such a study immediately; and
(4) some members of the public have reflected that the Government has repeatedly "backtracked" on the issue of using MPF contributions for first home purchases in the past (including the former Secretary for Financial Services and the Treasury indicating in his reply to my question on November 29, 2017 that the issue would be studied, and the Chief Executive also stating prior to the delivery of this year's Budget that the Government would study the issue), with none of the commitments having been implemented to date, and there are views pointing out that each instance of "backtracking" by the Government has left the public deeply disappointed, whether the authorities will, in the light of the potentially significant public demand for a housing-for-pension scheme coupling MPF first home purchases with reverse mortgages, listen carefully to public opinion and consider the home for retirement plan of "MPF first home purchases plus reverse mortgages"; if not, of the reasons for that?
Reply:
President,
In consultation with the Housing Bureau and the Hong Kong Mortgage Corporation Limited (HKMC), the reply to the four parts of the question is as follows:
(1) One of the missions of the HKMC is to promote the development of the retirement planning market. To this end, the HKMC launched the brand of "HKMC Retire 3" in mid-2021 to promote the HKMC Annuity Plan, the Reverse Mortgage Programme (RMP) and the Policy Reverse Mortgage Programme (PRMP). With ongoing efforts in promotion and education, public receptiveness to the three products has been enhanced. The business performance of the three products over the past three years is tabled below:
| 2022 | 2023 | 2024 | |
| RMP (Number of approved applications) |
938 | 797 | 1 033 |
| PRMP (Number of approved applications) |
41 | 44 | 55 |
| HKMC Annuity Plan (Number of policies) |
3 254 | 2 205 | 10 835 |
The daily operations of the HKMC Annuity Plan, the RMP and the PRMP involve various areas of work, including customer service, promotion, underwriting, finance, actuarial analysis, and information systems. The HKMC and its relevant subsidiaries deploy manpower resources as appropriate according to actual needs to properly operate and promote the products. For instance, as the Hong Kong community returned to normalcy after the epidemic, the HKMC has resumed promoting the "HKMC Retire 3" substantially since 2023, with 76 and 133 promotional events held in 2023 and 2024 respectively, including seminars and information booths. There were about 15 staff members directly planning and organising the promotional events. The expenses for the promotional activities were absorbed by HKMC's internal resources.
(2) The RMP has become increasingly popular since its launch in 2011. As of end-April 2025, a total of over 8 200 applications have been approved, with a year-on-year increase by around 30 per cent in the number of approved applications in 2024. As the RMP is by nature a loan arrangement, its demand depends on various factors, such as the personal needs of individual retired homeowners, the condition of the residential property and financial markets (including interest rate fluctuation), etc. The HKMC will continue its public education and promotion to help the elderly make proper financial arrangements for retirement.
(3) and (4) The Mandatory Provident Fund (MPF) system is set up to assist the public to save up for their retirement. Any proposals allowing early withdrawal of accrued benefits, including for the purpose of first-time home ownership, must take into consideration the corresponding reduction of scheme members' accrued benefits meant for their retirement. The MPF is a long-term investment with compounding effect, designed to allow the MPF benefits to accumulate steadily and be kept in the accounts for value growth during the working life of scheme members. Therefore, accrued benefits should be preserved in the system as far as possible and should only be withdrawn upon retirement of the employed persons. If we were to relax the preservation requirement on accrued benefits and allow scheme members to make early withdrawal to meet home ownership needs, the accrued benefits would be leaked from the system and fail to accumulate for value growth, thereby undermining the integrity of the MPF system and rendering it difficult to achieve the purpose of assisting the working population to save for their retirement.
Therefore, we should carefully assess the implications of allowing scheme members to withdraw their the MPF accrued benefits early for the purposes of first-time home ownership and future application for reverse mortgage on their retirement savings. These considerations include: when comparing with other countries and regions, Hong Kong's current MPF mandatory contribution rate is relatively low, and it may undermine the intended purpose of the MPF of providing basic retirement protection for employed persons if the preservation requirement on accrued benefits were relaxed; investments in real estate bear higher risks than those in the MPF funds, and purchasing properties with the MPF would diminish the MPF system's benefits of investment risk diversification; the arrangements regarding whether the proceeds from the sale of a property of which the down payment for its purchase was paid for with the MPF funds should be reinvested in MPF, etc. The Government and the Mandatory Provident Fund Schemes Authority will continually review the operation of the MPF system taking into account different factors, and welcome views regarding the MPF system reform from various sectors.
Ends/Wednesday, May 7, 2025
Issued at HKT 15:00
Issued at HKT 15:00
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