Hong Kong Pension Fund Inflows Lowest in Three Years Amid Exodus

(Bloomberg) -- Hong Kong’s pension fund inflows likely dropped to their lowest in three years as residents take early retirement or leave the city, according to an independent research firm. 

Net inflows to the Mandatory Provident Fund (MPF) system in the third quarter slowed to HK$10.5 billion ($1.3 billion), the lowest since 2018 when MPF Ratings Ltd. started tracking the data. The amount of new money has been falling since the second quarter of last year, according to the firm’s estimates, which are based on publicly available data.

Total contributions received and benefits paid have previously fluctuated from quarter to quarter, a spokesperson for the Mandatory Provident Fund Schemes Authority said, adding that third quarter figures will be released in due course. The program, which allows participants to pick from a wide variety of privately managed funds, managed about $157 billion at the end of June, according to its most recent quarterly report. 

The authority “clearly specifies early withdrawal reasons; amongst them are retirement and early retirement, offsetting of severance and long service payments, as well as permanent departures from Hong Kong,” Francis Chung, executive chairman at MPF Ratings, said in an interview.  “Given the local and global challenges Hong Kong has faced in the past 15 to 18 months, unusually high numbers in these categories are possible.”

The drop in MPF inflows coincides with the city’s shrinking population since mid-2020. The former British colony’s population declined 1.2% in the first half compared with a year ago. 

Many Hong Kong residents have left the city following the large-scale pro-democracy protests in 2019 and a national security law imposed by China last year. The U.K. government anticipates about 300,000 residents will use British National (Overseas) passports to leave Hong Kong. 

Even though people leaving the city permanently are entitled to withdrawal, some residents moving to the U.K. via the BN(O) passport route said they were not allowed to take their retirement money with them, Bloomberg reported in August.

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