Hong Kong and Singapore: Two approaches to the provision of pensions in Asia

Abstract

This paper analyzes the differing practices of the 2 affluent Asian financial centers of Hong Kong and Singapore with respect to providing income security to their rapidly aging populations. Compared to Singapore's 50-year-old CPF, which is centrally managed, non-transparent and non-accountable, Hong Kong's MPF plan, begun in 2000, incorporates nearly all the best international pension fund management and governance practices. While members of the MPF earn market rate of returns and enjoy considerable choice, CPF members earn interest that bears no resemblance to returns from investing their assets, and its members enjoy very limited choice. Both the MPF and CPF members do not enjoy protection against longevity and inflation risks and do not address the needs of the lifetime poor.