Hong Kong pension system ranks second in Asia: report

It ranks 19 out of 44 in the global rankings.

Hong Kong has the second-best pension system in Asia, beaten only by Singapore, ranking 19 out of 44 in the global rankings.

Hong Kong’s overall index of 64.7 was dragged down by its score in the Adequacy and Sustainability sub-indices which scored 61.5 and 52.1, respectively. It was partially offset by the Integrity sub-index at 87.6.

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Mercer said that Hong Kong’s overall index could be improved by several factors namely: 

• Introducing a requirement that part of the retirement benefit must be taken as an income stream
• Increasing the minimum pension for low-income pensioners
• Increasing the level of household savings and reducing the level of household debt
• Increasing the labour force participation rate at older ages as life expectancies rise
• Introducing requirements to protect all the pension interests of both parties in a divorce

The index value for Hong Kong SAR increased from 61.8 in 2021 to 64.7 in 2022, primarily due to the revised scoring and increases in the net replacement rates.

Mercer’s Global Pension Index overall score is measured by calculating the three sub-indices. The first is Adequacy, which takes into account, benefits, system design, savings, government support, home ownership, and growth assets. The second is Sustainability which measures pension coverage, total assets, demography, public expenditure, government debt, and economic growth. The last is Integrity which measures regulation, governance, protection, communication, and operating costs.