HKIFA: Retirees should learn to manage investment risks after retiring

The Hong Kong Investment Funds Association (HKIFA) recommends local pensioners learn to manage investment risks related to their post-retirement lives because investment returns after they stop working will assume greater importance.

The recommendation follows a survey by the city's fund management industry association in the fourth quarter of last year in which nearly 1,000 people who were still working were interviewed.

According to the survey, 58 percent of the respondents said they intend to withdraw their respective Mandatory Provident Fund-accrued benefits in a lump sum because they believe they can manage the money themselves more effectively. Another 57 percent said lump-sum payments will give them greater flexibility to manage their daily expenses.

Around 53 percent of respondents said deposits constitute a very large portion of a person's total assets. About 35 percent of employees expect these deposits will be a key source of their post-retirement income.

HKIFA Pensions Subcommittee Vice-Chairman Philip Tso said: "While deposits provide liquidity and security, people must be aware that they also have to manage other key post-retirement risks." He said this includes longevity and investment risks.

"The survey indicates that there are needs which are unique to the post-retirement phase (of life) such as the need for an income stream," he said.

"As more and more employees retire, helping employees manage their retirement funds effectively … will assume greater importance," he added.

In 2016, the MPF Scheme Authority started to allow designated MPF members to choose between withdrawing their yields by installments, or in a lump sum, and retaining the benefits for continuous investment, in a bid to enhance flexibility.