Financial Institution of HK Can MPF Protect us

Financial Institution of HK Can MPF Protect us?

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

The MPF System: Background – Ageing Population – People aged 65 would increase rapidly – 0. 8 million in 2003 --->0. 98 million in 2013 ---> 1. 55 million in 2023 --->2. 24 million in 2033 – Aged proportion in the population – 12% in 2003 --->13% in 2013 ---> 19% in 2023 --->27% in 2033 Lai Chee Wai

The MPF System: Background –Retirement Protection –Before the implementation: onethird of 3. 4 million workforce –After the implementation: 85% Lai Chee Wai

Lai Chee Wai

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

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

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

Compared with CPF in Singapore Employee Contribution Total Age By Employer By Employee 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 5 8. 5 Above 65 3. 5 Chan Pui Wan

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

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

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

Compared with CPF in Singapore • Healthcare Medisave Account build up savings for healthcare needs – Ensure 2 schemes: • Medi. Shield : medical insurance scheme • Elder. Shield : severe disability insurance scheme Lee Mau Wing

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

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

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

Can MPF Protect us? Four general types of MPF plans 1. Capital Preservation fund 2. Low-risk fund 3. Middle-risk fund 4. High-risk fund Examples: Hang Seng bank and AIA Cheung Kin Sing

Can MPF Protect us? Return % Hang AIA Seng Monthly income after 65 Capital Preservation fund / Low-risk fund nil >4000 Middle-risk fund 5. 66 6. 05 ~7500 High-risk fund 12. 84 13. 17 ~17500 Cheung Kin Sing

Can MPF Protect us? • MPF can’t protect lower level • 1. High transaction cost • 2. No integrated account Cheung Kin Sing

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 Sing

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

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

MC • 1. 2. 3. 4. Why the US Pension Fund call 401(K)? Minimum Charge is US$401 the 401（K）term ordained in the taxation regulations of America There are 401 committees for the fund None of the above

MC 1. 2. 3. 4. About the withdrawal, do you know when can you take back you fund if you are a Singaporean? 60 62 64 66

MC • Which of the following is not our recommendation? 1. 2. 3. 4. Increase contributions Increase the variety use of fund Exemption from income Tax Decrease the variety of investment options

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