Can a "Compulsory savings" scheme enhance the future happiness of society? A survey of the Mandatory Provident Fund (MPF) scheme in Hong Kong

Abstract

Ageing populations are and will continue to be a major issue for most Asian countries in the future. Hong Kong’s population is ageing so rapidly that the Hong Kong government has predicted that by 2033, 27% of the population will be over the usual retirement age of 65. The Mandatory Provident Fund (MPF) policy was introduced in 2000 as a retirement protection system. The core purpose of the MPF is a “compulsory saving” scheme to secure future well-being in retirement. This paper uses an ordered probit model to review achievement of the MPF scheme in terms of self-reported, expected happiness in retirement. A survey, conducted by “Economics and Well-being Research” of Hong Kong Shue Yan University in February 2007, used randomly selected telephone numbers from residential telephone directories to collect the data. A total of 543 respondents were successfully interviewed. This paper aims to answer the following two questions: 1) what are some of the identified determinants of expected happiness in retirement? 2) What can other countries learn from the experience of implementing the MPF in Hong Kong?