Members’ satisfaction with the Mandatory Provident Fund in Hong Kong has not been significantly affected by heightened market volatility resulting from the coronavirus pandemic, according to the latest findings of human resources consulting firm Mercer.
The Mercer MPF Satisfaction Index, which seeks to gauge Hongkongers’ sentiment towards the MPF system, saw an average satisfaction level of 52.8 from January to August 2020. The monthly index recorded a rating of 53.2 for August, a slight increase from the average rating of 51.5 since the launch of the index in April 2017.
While it dipped to 49.8 in June, it bounced back to 54 in July when the MPF’s total assets surpassed HK$1 trillion. March saw the index’s highest-ever satisfaction level at 57.3. This coincided with the intensive advertising and promotion of the government’s tax-deductible voluntary contribution programme as the MPF providers went out in full force to encourage sign-ups before the March 31 2020 deadline. The increase in awareness likely drove higher engagement and, as a result, higher satisfaction levels.
The same month also saw severe falls in equity markets, as investors reacted to reports of the rapid spread of Covid-19 across the globe, along with the cascade of border closures, lockdowns and business disruptions, suggesting that satisfaction levels have low correlation to market movements, Mercer says.
The survey also indicates that members still prefer in-person interactions when it comes to the MPF. While there was a 10% increase in members using digital channels to access information and advice on MPF matters in the early days of the pandemic in Hong Kong, the reliance on digital channels dipped as social distancing restrictions eased.
Respondent engagement is positively correlated with satisfaction with the MPF: the higher the knowledge level, review frequency or participation in voluntary contributions, the higher the satisfaction level, according to the survey results.
Says Freddie Cheng, MPF segment leader for Mercer in Hong Kong: “Those who feel they are more knowledgeable about the MPF tend to be more satisfied. The MPF providers have been stepping up efforts at improving trustee governance and offering more member services. The MPFA has also intensified communications to the public.”
“Yet only 27% of respondents expect the MPF to cover half or more than half of their post-retirement expenses. More can and should be done in financial planning education so that more members can understand the benefits of the MPF. As the scheme turns 20 this year, it will be timely for all the stakeholders to consider the effectiveness of the programs on promoting education and engagement,” Cheng adds.
The average satisfaction index score for respondents with only one MPF account was 54, higher than respondents with multiple MPF accounts (49.3). This suggests that the ease of managing MPF accounts is a key driver in MPF satisfaction, Mercer says, adding that industry players should continue to promote the benefits of consolidating accounts.
According to the survey, 30.8% of respondents review their MPF portfolio less than once a year and 6.4% have never reviewed their MPF portfolio. “Educating employees about the importance of regular MPF portfolio reviews is critical to ensure alignment with long-term financial/retirement goals,” says Cheng. “Reviewing their MPF accounts will also help them check that their personal contact details are up to date and explore the services that their MPF providers are able to offer.”