Financial Institution of HK

1
Financial Institution of HK

• Can MPF Protect us?

2
Member List

• Chan Pui Wan 033024
• Lun Pui Wai 033031
• Cheng Sin Sing 033034
• Lee Mau Wing 033035
• Cheung Kin Sing 033039
• Lai Chee Wai 033079

3
The MPF System Background

• Ageing Population
• People aged 65 would increase rapidly
• 0.8million in 2003---gt0.98 million in
  2013---gt1.55 million in 2023---gt2.24 million in
  2033
• Aged proportion in the population
• 12 in 2003 ---gt13 in 2013---gt19 in
  2023---gt27 in 2033

Lai Chee Wai
4
The MPF System Background

• Retirement Protection
• Before the implementationone-third of 3.4
  million workforce
• After the implementation 85

Lai Chee Wai
5
Lai Chee Wai
6
Compared with 401(K) in USA

• Legislated in 1981
• Commonly known as 401(K)
• Due to the 401(K)term ordained in the taxation
  regulations of America
• Applied to private company only
• Voluntary in nature
• Attraction comes from the 401(K) income tax
  exempted in the contributions

Lai Chee Wai
7
Compared with 401(K) in USA

• Planned asset value 1.41 trillion US dollar
  Stock market value of Hong Kong x 2.5
• Abundant accumulated wealth
• the average account asset value of the
  65-year-old American retire people is 185,474 US
  dollar?401(K)approximately 1500 thousand HK
  dollar
• To hock the planned asset and borrow money from
  the banks, insurance companies listed in the
  campaign

Lai Chee Wai
8
Compared with CPF in Singapore

• Contribution
• Contribute by both employee and employer
• But the rate is changing in different age e.g.
  below 50 the total of their contribution is 33
• MPF only have one rate is 10 in total

Chan Pui Wan
9
Compared with CPF in Singapore
Employee Age Contribution By Employer ( of wage) Contribution By Employee ( of wage) Total Contribution ( of wage)
Below 50 13 20 33
50 55 9 18 27
55 60 6 12.5 18.5
60 65 3.5 7.5 11
Above 65 3.5 5 8.5
Chan Pui Wan
10
Compared with CPF in Singapore

• Pension Account
• 3 accounts for different proposes
• Ordinary Account
• Special Account
• Medisave Account
• MPF only have one account with one propose

Chan Pui Wan
11
Compared with CPF in Singapore

• Saving Interest
• minimum interest rate 2.5
• Special and Medisave Accounts earn additional
  interest of 1.5
• MPF only depend on which MPF plan you choose
• And there is no interest from the Capital
  Preservation Funds

Chan Pui Wan
12
Compared with CPF in Singapore

• Withdrawal
• allow withdraw the saving at 55 CPF Minimum Sum
• leaves the CPF Minimum Sum at 62?receive the
  monthly income
• MPF only allow you to pick the lump sum at age 65

Chan Pui Wan
13
Compared with CPF in Singapore

• Healthcare
• Medisave Account
• ?build up savings for healthcare needs
• Ensure 2 schemes
• MediShield medical insurance scheme
• ElderShield severe disability insurance scheme

Lee Mau Wing
14
Compared with CPF in Singapore

• Property Ownership
• Ordinary Account
• ? buy a public flat under the Public Housing
  Scheme
• ? buy private property under the Residential
  Properties Scheme
• ? buy commercial properties under the
  Non-Residential Properties Scheme.

Lee Mau Wing
15
Compared with CPF in Singapore

• Protection for family
• Dependants' Protection Scheme
• ?helping for the family, that member is
  permanent incapacity or death
• Home Protection Scheme
• ?protect from losing the home
• Education Scheme
• ?loan for full-time tertiary education

Lee Mau Wing
16
Compared with CPF in Singapore

• Asset Enhancement
• CPF Investment Schemes
• ?invest the Ordinary and Special Accounts
  savings
• E.g. provides Professionally Managed Products,
  Unit Trust, Exchange Traded Funds, Shares, Bonds
  and Property Funds and also Fixed Deposit

Lee Mau Wing
17
Can MPF Protect us?

• Four general types of MPF plans
• Capital Preservation fund
• Low-risk fund
• Middle-risk fund
• High-risk fund
• Examples Hang Seng bank and AIA

Cheung Kin Sing
18
Can MPF Protect us?
Return Return Monthly income after 65
Hang Seng AIA Monthly income after 65
Capital Preservation fund / Low-risk fund nil nil gt4000
Middle-risk fund 5.66 6.05 7500
High-risk fund 12.84 13.17 17500
Cheung Kin Sing
19
Can MPF Protect us?

• MPF cant protect lower level
• 1. High transaction cost
• 2. No integrated account

Cheung Kin Sing
20
Recommendations

• Increase contributions
• increase the upper limit
• reduce the government spending on social welfare
  
• Increase the variety use of fund
• using different account for saving the MPF
  according the use of the funds
• lessen the medical expenditure by their funds for
  healthcare

Cheng Sin Sing
21
Recommendations

• Interest rate for Capital Preservation Funds
• No exact Capital Preservation Funds
• Not interest in investment
• Increase the variety of investment options
• Prefer high risk high return
• Equities link notes
• MPF as an investment rather than protect
  retirement
• Exemption from income Tax
• Learn from Singapore
• Lower the burden of middle class
• More attractive of MPF

Lun Pui Wai
22
Conclusion

• MPF was established in 2000
• Cannot be compared with the model of USA and
  Singapore
• Repayment rate cannot be achieved indeed
• Merit--- Cheap
• Equal to every members
• Encourage them to increase their voluntary
  contributions
• Safeguard their retired life

Lai Chee Wai
23
MC

• Why the US Pension Fund call 401(K)?
• Minimum Charge is US401
• the 401(K)term ordained in the taxation
  regulations of America
• There are 401 committees for the fund
• None of the above

24
MC

• About the withdrawal, do you know when can
  you take back you fund if you are a Singaporean?
• 60
• 62
• 64
• 66

25
MC

• Which of the following is not our recommendation?
• Increase contributions
• Increase the variety use of fund
• Exemption from income Tax
• Decrease the variety of investment options

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The End