The Mandatory Provident Fund Schemes Authority is conducting a study on allowing scheme members to withdraw part of their MPF accrued benefits before attaining the retirement age for first home purchase.
Secretary for Financial Services & the Treasury James Lau told legislators today it is inappropriate to compare the Central Provident Fund in Singapore, which allows partial withdrawal of accrued benefits for home purchase, with Hong Kong's MPF system.
He said there are three sub-accounts in a member's savings scheme for retirement, home purchase and medical purposes in the Singaporean system where the contribution rate can reach 37%, while for the MPF system the total contribution rate of both employers and employees is only 10%.
Mr Lau said the MPF system was set up to help the working population accumulate savings for their retirement. Any arrangements allowing early withdrawal of accrued benefits will lead to a reduction in these benefits for their retirement.
In determining whether to allow MPF scheme members to withdraw accrued benefits early on the grounds of first home purchase, the Government will consider all factors holistically, and study carefully whether that reason is congruous with the policy objectives of establishing the MPF system.
Currently 85% of the local employed population, or over 3.2 million employees and self-employed people, are covered by the MPF system or other forms of retirement protection.
Mr Lau said from the inception of the MPF system until the end of September this year, MPF contributions together with investment returns have grown to $793 billion, of which $229 billion have been investment returns net of fees and charges.
Over the 16-year period, an annualised return of 4.4% after fees and charges was recorded, higher than the 1.8% average yearly inflation rate over the same period, showing the fund system has added value to scheme members' assets, he said.
The authority will launch a new MPF fund performance platform on its website in February to provide information about fund performance as well as risk and fee levels to help scheme members choose effective constituent funds which suit their investment needs and risk appetites, Mr Lau added.
