The Pension Schemes Association and EY Release Study Marking 25 Years of Hong Kong’s MPF System

The Pension Schemes Association (PSA), in partnership with Ernst & Young Advisory Services Limited (EY), today released a comprehensive thought‑leadership paper reviewing the 25‑year journey of Hong Kong’s Mandatory Provident Fund (MPF) System. The study highlights the system’s major achievements, evolving landscape, and opportunities for further strengthening Hong Kong’s retirement landscape.

1. A Stronger Foundation for Retirement Protection

The MPF system empowers the working population to take an active approach to retirement planning.  Before the MPF was introduced, only one-third of the working population had retirement protection. Today, the MPF has achieved a 100% enrolment rate among employers and employees, with 89% participation among self-employed individuals. The enrolment rate reflects how effectively a pension system is utilised by the pre-retirement population and serves as a key indicator of future trends.

MPF assets surpassed HK$1.5 trillion as of September 2025, marking a 130% increase from 10 years ago. This demonstrates the system’s ability to help members build meaningful nest eggs over decades.

2. Improved Social Outcomes

The MPF system has reinforced a culture of long-term financial responsibility. The net pension replacement rate rose from 34.1% in 2011 to 41.5% in 2022, marking steady improvement in retirees’ income security. Elderly poverty rates have declined compared with the pre‑MPF era, when over 40% of elderly individuals lived below the social security level. By enhancing retirement funding through individual accumulation, the system has contributed to an improvement in supporting the population’s financial needs during retirement.

3. Driving Financial Market Development

Consolidated and systematic MPF contributions have channelled long‑term capital into financial markets, supporting diversification and innovation The number of MPF fund options increased from 299 in 2001 to more than 370 in 2025, giving members greater choice. This diversification has contributed to improved investment outcomes through market cycles over time.

4. Member Behaviour and Education Gaps

Investor education remains an important building block for the long-term success of MPF. Many workers rely on MPF savings as one of the sources of funds for retirement and therefore require simplified tools and clearer guidance for planning. In addition, most members prefer lump‑sum withdrawals, even they have not decided how to use the funds. This indicates a need for post‑retirement income solutions and education on decumulation planning.

5. Opportunities Ahead

The paper calls for collective action from government, trustees, employers, and scheme members to enhance long‑term retirement adequacy. Recommendations include:

• Regular review of the mandatory contribution rate.
• Further encouragement of voluntary contributions, especially among low‑income earners.
• Broader product innovation, such as access to new asset classes and solutions that support sustainable income stream in retirement.
• Leverage digitalisation, including the eMPF Platform and AI-powered tools, to streamline administration and enhance retirement planning experiences.

Charlotte Chan, Chairlady, Pension Schemes Association, comments: “As we mark the 25th anniversary of the MPF System, we recognise its vital role in transforming Hong Kong’s retirement landscape. The MPF has not only helped millions build a foundation for their future but has also elevated financial literacy and strengthened Hong Kong’s position as a leading global financial centre.

Looking ahead, we must continue evolving the system, from enhancing contribution adequacy and deepening investment flexibility to supporting members with clearer guidance and innovative solutions. The PSA remains committed to working closely with policymakers, regulators and industry stakeholders to ensure the MPF System remains robust, inclusive and sustainable for generations to come.”

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Media contacts
Secretary, Pension Schemes Association / admin@pensionschemes.org

About the Pension Schemes Association (PSA)
Pension Schemes Association (PSA) was established in 2018 with six founding members. As the most prominent MPF sponsor association in the industry, PSA assumes the bridging role among stakeholders to facilitate further development in the MPF system. In addition, PSA acts as a consultative body in liaising with relevant policy makers and regulatory bodies on matters related to the development of the MPF system. PSA also aims to enhance the trust and confidence in the MPF industry by partnering with industry stakeholders to cultivate public awareness of MPF.

Visit www.pensionschemes.org to discover more.

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