Measuring up

Mercer launches index to gauge satisfaction with Hong Kong retirement system

There was good news and bad news for Hong Kong's retirement overseers in Mercer's newly launched index to measure local satisfaction with the territory's Mandatory Provident Fund.

The bad news first: The initial survey in April of more than 200 members of the special economic zone's HK$593 billion ($76 billion) defined contribution system showed almost six respondents expressing dissatisfaction with the MPF for every one claiming to be satisfied.

Now the good news: The survey showed Hong Kong citizens approaching retirement are more satisfied with the DC plan than the territory's younger cohorts. On a scale of 1 to 100, with 100 being the most satisfied, the average rating for respondents aged 55 or above was 66.4 in April, above the 47.3 score for respondents between 35 and 54 years old and 45.59 for those between 20 and 34.

That was true even though the current generation approaching retirement had, at best, 17 years since the MPF's launch in 2000 to use the system as a retirement savings vehicle, a fraction of the 40 years or more that Hong Kong citizens entering the workforce today can expect, noted Billy Wong, Mercer's wealth business leader for Hong Kong, China and Korea, in an interview.

Another hopeful sign is that respondents who claimed a good understanding of the MPF likewise reported higher satisfaction with the system than those claiming little or no familiarity, Mr. Wong said.

The MPF satisfaction index, Mercer's first for any national retirement system, will be used to generate empirical results to better understand how the MPF is being embraced by the local population and what changes could have the biggest impact in driving up participant satisfaction, Mr. Wong said.

An important change in April was the introduction of a target-date default fund.

Still, the index's second reading for May, announced June 15, slipped to 48.7 overall from 50.3 for April, even though the average investment return for MPF members in May was 2.1%, according to a Mercer news release.