How to Save for Your Retirement Needs in Hong Kong

Retirement in Hong Kong may be exciting, but it will cost you. It is important to be financially prepared if you plan to retire in this region. After living in this region for a long time, you have to know how expensive it can be – even for the elderly.


According to an article published on, Hong Kong is the topmost expensive city in the world. Even a cup of coffee is very expensive. It is okay to live here if you are working. After all, the wages make it affordable for residents. But what happens when you retire? Since you have stopped working, you no longer have an income. How can you afford to live in this city?


Easy. You need a sound retirement plan.


The Hong Kong government is actually working hard to make sure that retiring in this region is as appealing as it is for workers living here. According to the data provided by, the government started a 6-month consultation period about a universal pension plan. Apparently, Hong Kong authorities are thinking of giving a universal amount regardless if they are rich or poor. If this pushes through, pensioners will get HK$3,320 a month to help them finance their lifestyles.


Do you think this would be enough? And do you think this would be a good idea?


That amount may be appealing but you have to stop thinking about what the government can do for you when you retire. It is important for you to make your own preparations when it comes to retirement.

How to Save for Your Retirement Needs in Hong Kong

Different retirement plans in Hong Kong

There are various retirement plans that you can look into in Hong Kong.


Social Security Assistance Scheme (SSA)

This is the plan that is sponsored by the government. It is a means-tested monthly allowance that pensioners in Hong Kong receive on a monthly basis. To qualify for this pension, you have to be a legal resident in this region for 7 years. In the year leading up to your application, you have to stay in Hong Kong for a year without leaving. The Old Age Living Allowance is given to those 65 years and above and in need of financial support. The current amount received by pensioners through this scheme is $2,495 – according to There are also schemes like the Old Age Allowance, Higher Disability Allowance and the Normal Disability Allowance that can add to your monthly benefits.


Occupational Retirement Schemes Ordinance (ORSO)

Through the ORSO, employers can set up a voluntary retirement scheme for employees as a benefit. It has a couple of requirements like it should not exceed 10% of the scheme assets that is invested in the business of the employer. It should also be set up under an insurance policy or trust with one independent trustee. This is also an ideal retirement plan for individual employers.


Mandatory Provident Fund Scheme Ordinance (MPF)

This is the mandatory retirement scheme that all employers should set up for their employees. This was introduced in December 2000 and covers all workers between the ages 18 to 65. The mandatory contribution is 5% of the salary of the employee – which the employer is required to match. There is a set limit of HK$5,000 (minimum) and HK$20,000 (maximum). Regardless if the employee changes employers, the contributions will remain in their account and can be withdrawn upon retirement, disability, permanent departure (from Hong Kong) and death.


Long Service Payment (LSP)

This is solely provided by the employer if you meet certain requirements as a long-term employee. Under the Employment Ordinance, employers are required to pay employees a lump sum benefit when they retire. The requirements include continuous service of 5 years, retiring after the age of 65, etc. This benefit should be ⅔ x final wage rate x years in the company. The cap in the monthly wage is HK$22,500 and the overall cap is HK$390,000. This can be offset by any employer retirement scheme that includes ORSO or MPF.


You need to check with your employer about your retirement plan so you can calculate how much to expect when you retire. If you think it will not be enough, you have to start saving more money to live the type of retirement that you want to lead.


How will you know how much you need to retire?

Of course, the question here is how much should you target in retirement? There are a couple of factors to consider. To help you come up with a reasonable figure, here are three questions that you need to ask yourself.


Where will you live?

The answer to this question will define how much you need to buy the necessities in that place. Usually, living in Hong Kong Island is more expensive compared to Kowloon. Think carefully about where you want to reside. Usually, if the rent is low, the necessities are cheaper too. Not only that, you have to consider the place where you will live. Remember, the smaller the place, the cheaper it is.


What lifestyle will you lead?

Another consideration is the lifestyle that you will lead. Since you will no longer work, what will you do with your spare time? Will you travel? That would cost you money? Will you take up a hobby? How much would that cost? By determining how you will spend your retirement life, you should be able to guess how much you will need to support that.


How is your health?

The final question that you need to ask yourself involves your health. According to, the cost to visit a private practitioner is 47% higher in 2015 compared to 2007. The article revealed that a lot of the elderly have turned to private doctors and facilities to ensure the quality health care that they will receive. This will cost a lot but that is the price you pay for not taking care of your body. If your health is not in the best shape, you should prepare to spend a lot on your health care when you retire. On the other hand, you will also need more money when you retire if you are healthy. After all, living longer would mean you need to sustain your retirement money for a longer period. You need to boost your funds to make sure you will not outlive your money.


When you have answered these questions truthfully, you should be able to calculate how much you need to finance a comfortable retirement. Make sure you know your options and target so you can make early plans for your golden years.

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