The 4.75 million members of Hong Kong's Mandatory Provident Fund (MPF) enjoyed a 13 per cent increase in their pension assets in 2024 thanks to the best investment returns in four years.
The MPF earned a combined HK$102.4 billion (US$13 billion) last year, equivalent to HK$21,500 for each member, according to data from MPF Ratings, an independent research firm.
The 379 MPF investment funds generated an average return of 8.8 per cent for the year, compared with a 3.5 per cent gain in 2023 and a loss of 15.7 per cent in 2022. This is the best annual return since an 11.4 per cent gain in 2020.
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The strong results boosted the MPF's total assets to HK$1.29 trillion. The sum, which takes into account investment gains and new contributions from members, works out to HK$271,500 per member. This is 13 per cent higher than a year earlier, indicating an average portfolio increase of HK$31,600 per member.
Pedestrians walk on a pedestrian bridge during lunchtime in Central on August 16, 2024. Photo: Xiaomei Chen alt=Pedestrians walk on a pedestrian bridge during lunchtime in Central on August 16, 2024. Photo: Xiaomei Chen>
"2024 has been a productive year for investors," said Mark Konyn, chief investment officer with AIA, one of the major MPF providers. "Reducing inflation and positive overall returns have supported the growth of retirement savings."
The strong performance of the MPF last year shows the benefits of the pension scheme, said Cheng Yan-chee, managing director of the Mandatory Provident Fund Schemes Authority.
"The MPF's performance reflects its resilience and stability over the years," Cheng said. "MPF scheme members are encouraged to make use of the merits of the MPF system that provide funds in different markets and asset classes, review their MPF investments regularly and build a diversified investment portfolio to mitigate investment risks."
He urged members to take a long-term view of their MPF investments because they will only need it decades later when they retire.
"MPF scheme members should not view the MPF from a short-term investment perspective, nor attempt to time the market, as this could lead to losses from buying high and selling low," he added.
Established in 2000, Hong Kong's MPF is a compulsory retirement scheme that gathers monthly contributions from employers and employees, representing up to 5 per cent of the employee's monthly salary.
The mandatory contribution is capped at HK$3,000 every month - half from the employee, matched by the employer. This is invested into the member's choice of funds. Employees can cash in their contributions and investment earnings at age 65.
US equity funds were the top-earning fund category in 2024, with an annual return of 21.6 per cent, followed by Japan equity funds at 19.6 per cent, while Hong Kong and China equity funds finished the top three at 15.9 per cent, MPF Ratings data showed.
"With over a 17 per cent market share, Hong Kong and China equities is MPF's largest and most important asset class," said Francis Chung, MPF Ratings chairman. "Generally speaking, when the local equity markets do well MPF also does well."
Hong Kong's benchmark Hang Seng Index jumped 18 per cent in 2024 to end the year at 20,059.95, snapping a record streak of four annual losses, after Beijing in September unveiled a package of stimulus measures to support the capital and property markets.
The CSI300, which tracks the top 300 stocks listed in Shanghai and Shenzhen, advanced by 15 per cent in 2024.
Mixed-asset funds, another popular MPF fund choice, which invest in equities and bonds, gained 9.9 per cent in 2024, MPF Ratings' data showed.
The default investment strategy (DIS), which uses a diversified approach to investing in global stocks and bonds and reduces the risk level according to the members' age, also performed well. DIS options with higher exposure to stocks reported a 9.3 per cent gain in 2024, while those more focused on bonds recorded 3 per cent growth.
Global bond funds were the worst performers with a loss of 2.7 per cent, while European equity funds lost 0.7 per cent.
Looking ahead, Chung urged members to keep an eye on risks and opportunities related to US president-elect Donald Trump's policies, such as his threats to increase tariffs on Chinese goods and plans for deregulation.
"While this rhetoric has proved to be popular for US equities, a US bias in MPF portfolios could come with consequences," Chung said. "Diversification minimises uncertainty, and the MFA's mandated DIS funds continue to be MPF Ratings' preferred investment option for MPF's 4.75 million members."
This article originally appeared in the South China Morning Post (SCMP) , the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved.