The Mandatory Provident Fund Schemes Authority says it is considering allowing those who are critically ill, unemployed or in dire need to withdraw part of their contributions before reaching the retirement age of 65.
Authority chairwoman Anna Wu Hung- yuk said a review by a working group felt there should be some flexibility in the system to allow withdrawals during times of emergency.
"We do not want people to withdraw all their contributions as the aim of the MPF is to safeguard their retirement," she said, adding the authority would have to come up with a clear definition for "serious illness."
"Personally, I think the amount that can be withdrawn should not be greater than 50 percent."
Wu said the authority is also considering the possibility of phased withdrawals, instead of a lump-sum payment, when beneficiaries reach retirement age.
She said the working group will submit a report to the authority's management board for consideration in September, and a public consultation will begin at the end of this year.
The authority also plans to set up a central database that will be needed if employees are allowed to choose their own funds in the future.
In addition, the MPFA will commission an independent study on the trustees' administration costs to identify ways to further simplify administrative processes.
"The level of fees of MPF schemes has always been a matter of great public concern. We believe there is still room for further fee reductions," Wu said.
Fernando Cheung Chiu-hung, a social sciences lecturer at Hong Kong Polytechnic University, said the early withdrawal of contributions would contradict the aim of the scheme.
"Citizens will find excuses to withdraw their contributions because they have little confidence in the MPF scheme. The administration costs are too high," he said, adding an early withdrawal for serious illness may be acceptable.
Currently, only those who are leaving Hong Kong permanently, who have lost the capacity to work or have retired at the age of 60 can withdraw money before reaching 65.
According to the MPFA, the number of members is around 2.5 million. The MPF system was launched in December 2000.
The Standard, Hong Kong
Samson Lee
21st July 2011