LCQ7: Improving Mandatory Provident Fund system
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Question:
This year marks the 25th anniversary of the implementation of the Mandatory Provident Fund (MPF) system. According to statistics from the Mandatory Provident Fund Schemes Authority, the total MPF assets amounted to around $1,340 billion as at the end of March this year. On improving the MPF system, will the Government inform this Council:
(1) of the number of MPF scheme members and their average MPF asset levels in each of the past five years, and set out in the table below with a breakdown by age group (i.e. (i) below 25, (ii) between 25 and below 30, (iii) between 35 and below 45, (iv) between 45 and below 55, (v) between 55 and below 65, and (vi) 65 or above), and MPF asset levels (i.e. (a) $200,000 or below, (b) between $200,001 and $400,000, (c) between $400,001 and $600,000, (d) between $600,001 and $800,000, (e) between $800,001 and $1,000,000, (f) between $1,000,001 and $1,500,000, (g) between $1,500,001 and $2,000,000, and (h) above $2,000,000);
Year:
| Members’ age group | MPF asset level | ||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | Average asset | |
| (i) | |||||||||
| (ii) | |||||||||
| (iii) | |||||||||
| (iv) | |||||||||
| (v) | |||||||||
| (vi) | |||||||||
| Total | |||||||||
(2) as the Government indicated in its reply to a question from a Member of this Council on May 7 this year that allowing members of the public to make early withdrawals of their accrued benefits to meet home ownership needs would result in such accrued benefits leaking from the system and failing to accumulate for growth in value, thereby undermining the integrity of the MPF system, but there are views that the Government may consider allowing members of the public to borrow the accrued benefits from their MPF accounts to fund a down payment on their first home, with repayment made in instalments over the mortgage term of the purchased property and all outstanding amounts in the MPF account to be repaid immediately upon the sale of the property, which will create a closed-loop funding mechanism to prevent funds from flowing out of the owner-occupied property market or MPF accounts, thereby maximising the value of MPF in supporting people's retirement, whether the government will consider the aforesaid proposal; and
(3) given that Hong Kong is about to become a super-aged society, whether the Government will consider emulating the provident fund systems of the Mainland and Singapore by setting up designated contribution accounts targeting areas such as healthcare and housing under the MPF system in the long term, and increasing the income ratio for MPF contributions to help members of the public to cope with various expenses after retirement?
Reply:
President,
In consultation with the Mandatory Provident Fund Schemes Authority (MPFA), the reply to the three parts of the question is as follows:
(1) As at end-2024, about 4.8 million Mandatory Provident Fund (MPF) scheme members held a total of around 11.2 million MPF accounts of various types (including contribution accounts, personal accounts and tax-deductible voluntary contribution accounts), hence each scheme member held more than 2.3 MPF accounts on average. The number of MPF scheme members and accounts over the past five years, the average amount of accrued benefits per MPF account by the age group of scheme members, and the number of accounts by the amount of accrued benefits are tabulated below:
Table 1: Number of MPF scheme members and accounts
| Year (as at year-end) |
Number of MPF scheme members | Number of MPF accounts |
| 2020 | 4 459 000 | 10 324 000 |
| 2021 | 4 586 000 | 10 477 000 |
| 2022 | 4 694 000 | 10 843 000 |
| 2023 | 4 754 000 | 11 058 000 |
| 2024 | 4 794 000 | 11 228 000 |
Table 2: Average amount of accrued benefits per MPF account by age group (As at end-2024)
| Age group | Average amount of accrued benefits per MPF account ($) |
| Under 25 | 8,600 |
| 25 to under 35 | 52,600 |
| 35 to under 45 | 126,700 |
| 45 to under 55 | 163,200 |
| 55 to under 65 | 149,000 |
| 65 or above | 73,800 |
Table 3: Number of accounts by amount of accrued benefits (As at end-2024)
| Amount of accrued benefits | Number of accounts |
| $200,000 or below | 9 373 000 |
| Between $200,001 and $400,000 | 1 072 000 |
| Between $400,001 and $600,000 | 408 000 |
| Between $600,001 and $800,000 | 181 000 |
| Between $800,001 and $1,000,000 | 88 000 |
| Between $1,000,001 and $2,000,000 | 98 000 |
| Over $2,000,000 | 27 000 |
As each scheme member may hold more than one account, and the accounts may be held under different MPF schemes, figures on the number of scheme members by their total accrued benefits are not available at present. MPF schemes are gradually onboarding to the eMPF Platform, which commenced operation in June 2024. Upon completion of onboarding of all MPF schemes, data relating to total MPF accrued benefits by individual scheme members could be compiled via the eMPF Platform.
(2) The MPF system is set up to assist the public to save up for their retirement. The idea of allowing scheme members to borrow their MPF benefits for the purpose of home ownership must take into consideration the impact on scheme members' retirement savings. MPF is a long-term investment with compounding effect, designed to allow 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 as far as possible and only be withdrawn and used upon retirement of the employed persons. If we were to relax the preservation requirement on MPF benefits and allow scheme members to borrow their MPF benefits to meet home ownership needs, the accrued benefits would fail to accumulate for value growth, thereby reducing scheme members' MPF benefits meant for their retirement and undermining the basic retirement protection for the working population. Furthermore, as the MPF system has the advantage of diversifying investment risks, investments in real estate bear higher risks than those in MPF funds in general. The arrangements requiring members of the public to repay in instalments after borrowing MPF benefits for home ownership purpose and make repayment with the proceeds from the sale of the property of which the down payment was met by MPF benefits also entail considerable complexity.
(3) Under the MPF system, employers and employees are currently required to respectively make mandatory contributions equivalent to 5 per cent of the employee's relevant income (with the current monthly contribution cap at $1,500). If the MPF system were to save up for medical and home ownership expenses at the same time without affecting the retirement protection for employed persons, we must consider increasing the overall MPF contribution rate. Drawing on practices in regions outside Hong Kong (such as the Mainland and Singapore), should dedicated savings accounts be set up to cover medical and home ownership expenses, the contribution rate to the relevant accounts could be as high as over 30 per cent of the employee's income. Given that the current total mandatory contribution rate stands at only 10 per cent, the proposal of introducing dedicated savings accounts for medical and home ownership purposes under the MPF system and raising the total MPF contribution rate must first reach a broad societal consensus.
The Government and the MPFA welcome views regarding the MPF system from various sectors, and will carefully assess the necessity and feasibility of each proposal to continuously improve the operation of the MPF system without compromising the basic retirement protection for scheme members.
Ends/Wednesday, July 2, 2025
Issued at HKT 15:00
Issued at HKT 15:00
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