Record Growth and Impressive Returns
In the fiscal year of 2024, Hong Kong’s Mandatory Provident Fund (MPF) witnessed unprecedented growth with a remarkable increase of HK$102.4 billion (US$13 billion). This surge translates to an outstanding average gain of HK$21,500 per member, marking a substantial 13% rise in pension assets for the fund’s 4.75 million members. These exceptional results were primarily driven by the best investment returns experienced in four years.
Investment Performance and Asset Accumulation
The MPF’s 379 investment funds collectively achieved an impressive average return of 8.8% throughout the year, showcasing a significant improvement from previous years’ performances. Compared to a modest 3.5% gain in 2023 and a substantial loss of 15.7% in 2022, this year’s returns have been exceptional, resembling the stellar performance seen back in 2020 with an 11.4% gain.
This robust financial performance propelled the MPF’s total assets to reach a staggering HK$1.29 trillion by the end of 2024. With this growth factoring in both investment gains and new contributions from members, each participant now holds an average portfolio value of HK$271,500 – indicating a remarkable increase of HK$31,600 per member compared to the previous year.
Market Outlook and Future Prospects
Mark Konyn, Chief Investment Officer at AIA – one of Hong Kong’s major MPF providers – hailed the year as “productive” for investors owing to favorable market conditions that included reduced inflation rates and overall positive returns nurturing retirement savings growth for participants.
Established two decades ago in 2000, Hong Kong’s MPF stands as a mandatory retirement scheme designed to accumulate monthly contributions from both employers and employees alike – typically amounting to up to 5% of an employee’s monthly salary.
Under this scheme, members contribute up to HK$3,000 each month – half borne by the employee and matched by their employer – which is then invested into various funds based on individual preferences. Upon reaching age 65, participants have the option to liquidate their accumulated contributions along with any investment earnings accrued over time.
As we look ahead towards future prospects for Hong Kong’s MPF scheme following its stellar performance in 2024, it becomes evident that prudent investments coupled with favorable market conditions continue to shape a promising landscape for retirement savings among its members.
