Claims of a large-scale exodus from Hong Kong have not been borne out by withdrawals of retirement benefits by people leaving the city permanently in the first quarter of this year. The number who withdrew money grew 11.8% to 7,600 from 6,800 for the period.
The latest statistical report from the Mandatory Provident Fund (MPF) Schemes Authority says about HK$1.3 billion (US$167.7 million) were withdrawn in the quarter, up 32% from HK$980 million in the same period of last year.
A pro-establishment newspaper concluded that a large-scale emigration trend had happened after anti-extradition protests in June 2019.
It said a total of HK$4.1 billion of MPF benefits had been withdrawn by 24,300 people in the nine months to March 31.
An immigration consultant was quoted as saying that many people left because they were worried about the worsening political situation and high property prices. A pro-Beijing lawmaker said some people chose to move away because they did not want their children to be brainwashed and become “black-clad violent protesters.”
Cheng Yan-chee, chief corporate affairs officer and an executive director of the MPF Schemes Authority, said previously that the authority did not have an in-depth analysis of the withdrawals. Cheng said some who withdrew benefits had moved to mainland China. He had not seen a significant change in the trend.
The MPF scheme was implemented in 2001. A worker is required to contribute 5% of his salary, or up to HK$1,500 per month, to a MPF account unless he is paid less than HK$7,100 per month. With another 5% contributed by the employer, the worker’s account should see a net growth of contributions up to HK$36,000 per year, regardless of the investment returns and administration fees.
A person can withdraw the benefits once before 65 because of a “permanent departure from Hong Kong.”
Since social unrest in Hong Kong last year, MPF withdrawals have been under the spotlight of the local media who want to find out how many people have left the city.
In the year ended March 31, 31,200 people withdrew benefits worth a total of HK$5.16 billion, which rose 11.64% from HK$4.62 billion a year ago. For the same period, MPF contributions rose 6.83% to HK$77.69 billion from HK$72.72 billion.
At the end of March 31, the net asset values of all MPF schemes rose 2.9% to HK$893.3 billion from HK$867.78 billion a year earlier. The MPF benefits withdrawn during the year ended March 31 only accounted for 0.58% of the net asset values of all MPF schemes at the end of March. On average, each person withdrew about HK$165,000.
David Wong Yau-kar, chairman of the MPF Schemes Authority, wrote in an article on September 6 that the net asset values of all MPF schemes had decreased from HK$969.46 billion at the end of 2019 to HK$893.3 billion at the end of March as the investment markets were hit by the pandemic. However, Wong said the figures had already rebounded and exceeded HK$1 trillion in July, showing a strong foundation of the MPF system.
On June 30, Beijing implemented a national security law in Hong Kong. In early July, the United Kingdom announced a path for Hongkongers with BNO status and their dependents to become UK citizens. The BNO citizenship scheme will start on January 1, 2021.
The MPF figures, only available as of the end of March, have not yet been able to show the impact of these developments.
Even if many BNO passport holders leave for the UK next year, it remains unclear whether they will be eligible to withdraw money immediately from their MPF accounts.
Kenrick Chung, general manager of employee benefits at Individual Financial Products, said people would not be allowed to withdraw their benefits during the six years when they were staying in the UK with BNO passports. Chung said Hong Kong’s Home Affairs Department could require a person to present a foreign country passport to prove permanent departure.
In a video, a Hong Kong YouTuber has made inquiries to three MPF companies whether he could withdraw his benefits by claiming that he would permanently leave Hong Kong for the UK with a BNO passport. He was told that he would not be able to withdraw his money because the BNO passport was a travel document that does not offer permanent residency.
In May 1996, the NPC standing committee made an explanation about China’s Nationality Law concerning its implementation in Hong Kong. It said from July 1, 1997, Hong Kong people could continue to use the British Dependent Territories Citizens or BNO passports as travel documents but they would not be entitled to British consular protection in Hong Kong and mainland China.
In late July this year, Beijing warned that the standing committee of National People’s Congress would re-interpret Article 24 of the Basic Law if the UK pushes forward with its plan to grant citizenships to BNO passport holders. It said BNO passport holders must choose between Chinese and UK nationality.