If you would try to read some related news about Hong Kong, you can say that currently, longer life expectancy and aging population are a primary concerns that Hong Kong shares with Singapore, which will cripple any countries in finances. In fact, both of these two countries share the same characteristics of high population density, elevated aging population, and prices of housing in the current market.

Big Contribution in Singapore’s CPF than Hong Kong MPF

In order to see the contribution between the two countries, take a look at the following:

• Singapore’s CPF or central provident fund is being used for many things – Actually, in Singapore, the amount of supreme contribution of income ceiling given by the employer and employee may depend on their age. Usually, if you are an employee, the maximum amount that you need to pay as part of your CPF is twenty percent and for employer, you will need to pay sixteen percent in your income as well.  If you would try to compare, you can see a lot of difference from it.
• Hong Kong’s MPF or Mandatory pension is purely used for retirement needs – Meaning to say, MPF allows their members to choose their own funds to invest with. However, when it comes to the amount of maximum contribution that need to pay, they are only the same, where employee pays five percent and employer pays five percent for their contribution income ceiling.
• Hong Kong MPF has higher returns than Singapore’s CPF – When it comes to the different of returns for both countries, it states that Singapore’s CPF ranges from 2.5 % from the ordinary account to 4% for their special return account. Furthermore, it is less efficient due to the reason that Singapore government make use of these funds for obtaining and investing between six to sixteen percent while giving back only 2.5% to four percent. On the other hand, for Hong Kong MPF, it recorded annualized 5.5% net fees between year 2000- 2010.

However, when it comes to the uses of CPF, it states that Singapore’s CPF has many uses compared to Hong Kong MPF. In fact, the CPF in Singapore has been tweaked to be used for many different purposes, such as for hospitalization, medical care, children’s education, and housing as well as for investment account.  While Hong Kong MPF is presently limited to only ten percent of person’s salary, it does not have enough funds as compared to Singapore.

Despite the big differences between the two countries, Hong Kong can potentially learn from Singapore, especially by increasing the contribution that they have for MPF. On top of that,  Hong Kong MPF could also be settled from funds to be used only for housing down payment, while providing funds paid by MPF, which may somewhat raise the price for property.

​In addition, for those who only have lower income, extra amount of funding should come from employers into the MPF for the education of their children. With that, this will ensure greater social mobility for the country and people, as well to move up just like with the Singapore.

Adapted from article on iCompareloan