Hong Kong's Mandatory Provident Fund, a compulsory pension for its residents, has passed HK$1 trillion in assets for the first time since it was established in 2000. The fund passed the milestone at the tail end of July, according to officials.
The achievement comes just a few months before the fund's 20th anniversary in December. The fund reached the total partly as a result of a significant 15 percent increase in asset values over the four months since April. The rise makes the fund a contender to become one of the world's top 20 pension funds.
At its current value of about $129 billion, the fund is now on par with Denmark's similarly structured pension fund. In Asia, the fund is the eighth-largest behind those run by countries like Japan, South Korea, Singapore, Malaysia and India.
The fund scheme covers nearly 3 million Hong Kong residents. Each member has about HK$333,000 in their accounts - with some having much more. According to the fund, about 62,900 accounts had more than HK$1 million at the end of 2019 - roughly 40 percent more when compared with 2018.
Under the scheme employers and employees are each required to contribute 5 percent of a member's salary. The contributions, which are typically up to HK$3,000 a month on average, are then handled by various investment companies such as banks, insurance companies and fund management companies. Members have full control over where their contributions are invested.
In an attempt to further enhance transparency the fund launched a one-stop Mandatory Provident Fund platform last year. This allows members to view updated fees and performances of different investment funds. Investment providers are required to provide more comprehensive information on the risk levels of their different funds.
Mandatory Provident Fund Schemes Authority chairman David Wong Yau-kar said in a blog post Sunday that many members were worried about the fund's performance given the economic effects of the international pandemic. He said while its performance was affected in the first quarter the fund immediately recovered.
He said the sharp recovery underscored the fund system's resilience and stability. Wong told fund members they needn't worry too much about short-term volatility and disruptions and adopt a longer-term view.
