Most Mandatory Provident Fund (MPF) members in Hong Kong expect their compulsory pension savings to last less than 10 years in retirement (eight years to be exact on-average), according to the results of a survey commissioned by HSBC Insurance.

The survey, conducted by the University of Hong Kong in January this year, polled 505 MPF members aged between 18 and 65 with a monthly personal income of more than HK$5,000 ($641).

Around one-third of respondents, or 34%, expect their MPF savings to last five to 10 years. Around 27% expect their MPF savings to last less than five years. Only 11% expect their MPF savings will last more than 10 years, of which 5% believe their funds will last 11-15 years and 6% believe their funds will last beyond 15 years. The rest said they do not know how long their MPF savings will last.

ôOur survey suggests that a majority of MPF members recognise that their MPF savings may not be sufficient to support them in their old age,ö says Jason Sadler, managing director for Hong Kong at HSBC Insurance. ôAs a general rule, people in retirement need two-thirds of their pre-retirement income to maintain their standard of living.ö

With increasing longevity, people in Hong Kong need to build a retirement fund that will support them for at least 20 years after they retire, Sadler says. Unless Hong Kong people take additional measures to build their retirement nest eggs, they will be unable to sustain their desired quality of life after retirement, he notes.

The survey also shows that many MPF members tend to slip into passive management of their MPF savings shortly after enrolment. One-third, or 33%, of the respondents said they have never reviewed their fund allocation since they began making MPF contributions.

The survey shows that the majority, or 89%, of respondents said they do not make voluntary contributions to their MPF portfolios. Only 10% of the respondents said they made voluntary contributions to boost their MPF savings; the average additional voluntary contribution reported was HK$1,200 ($154) a month.

More than four in 10 respondents, or 44%, said that they have not made any plans aside from their MPF scheme to cover their retirement needs. Of the 56% with plans in addition to their MPF arrangement, 48% bought insurance, 40% invested in mutual funds and 39% invested in stocks.

Sadler stresses that education is important in raising peopleÆs knowledge about retirement in general and MPF membersÆ understanding of their scheme arrangements. To help address this issue in Hong Kong, HSBC Insurance has set aside HK$20 million ($2.5 million) to carry out programmes to support MPF education.

ôWe are working to roll out a creative and engaging retirement education programme to reach different stakeholders, including parents, teachers, students and the general public at large,ö Sadler says. ôWe want everyone to join in the discussion about retirement planning and the benefits of taking responsibility of your own financial security, of starting to plan for retirement early and the need to take professional guidance when necessary.ö