Magazine: MPF emerging trends – Introduction of Retirement Income Funds

Bigger MPF balances

The total net asset value of all MPF schemes exceeded HK$1.553 trillion at the end of 2025. With a total of 4.794 million MPF members (including both active employees and former employees with MPF balance left in the system), this gives an average MPF balance of HK$320,000+ per member (source: MPFA Quarterly Report as of 31 December 2025).

As MPF balances get more substantial, members are likely to pay more attention to their own MPF holdings, particularly those who are contemplating retirement – how much do I need? What do I want to do with my retirement nest egg? How to manage/select investment funds to cater for retirement needs?

Evolving member needs as retirement approaches

The MPF system today offers a broad range of fund choices across different asset classes, risk levels, and investment objectives – mostly distinguished between equity funds, bond funds, money market funds and/or a mixture of these asset classes. During most of an employee’s working life, the emphasis is naturally on accumulation and long‑term growth. However, as employees move closer to retirement, their needs and concerns tend to shift. Questions around income sustainability, cashflow planning, and managing market volatility become increasingly relevant. For employers, this presents an opportunity to help members understand how their MPF choices can evolve over time. In addition to traditional growth‑oriented funds, retirement‑focused options — such as retirement income funds — are emerging as an additional choice that may support employees in transitioning from wealth accumulation to drawing a more predictable income in retirement.

Retirement Income Funds – an emerging trend

A new retirement income fund was registered with MPFA early this year, highlighting a growing focus on the post‑retirement phase of MPF planning by providers. The first such type of fund was launched in 2020. As of 30 April 2026, six out of the top ten providers (by asset size as of 31 March 2026) are offering them.

What are Retirement Income Funds?

As the name implies, retirement income funds aim to provide a stream of regular income (quarterly or monthly) to members in retirement. This means their main focus will be on income stability with dividends/payouts generated through interest from bonds, dividends from stocks, and other investment returns. However, dividends and payouts are not guaranteed and may vary depending on market conditions and investment performance. Different dividend modes will apply – reinvestment into the fund before retirement, and payouts to members after retirement. Retirement income funds can provide a monthly underpin in retirement, but the magnitude of payout will depend on the seed investment in the fund. You may find out more from providers’ relevant scheme material.

How to help your members to prepare for retirement?

Income-generating products may be of interest to the silver-haired generation in your organization. But the question is broader than that – how prepared are your employees for retirement and how would retirement income funds, or other options, fit into this?

Most MPF providers now have retirement planning tools, some even have AI-supported utilities to help select funds. When was the last time they came to brief members on retirement planning and the available tools? This is a prime candidate and low hanging fruit for your financial wellness program. Let us know if we could assist in making this happen.

WTW has the largest team of retirement consultants in Hong Kong who are available to help you with all aspects of retirement benefit design, provider review / monitoring, employee communication and financial analysis. Contact us for a discussion on how we can help.