Government eyes $36,000 tax break to incentivise retirement saving

It would apply to residents who voluntarily top up their MPF account.

A lawmaker is eyeing a tax reduction of up to $36,000 per year in a bid to encourage residents to build their nest eggs, according to plans submitted to the legislature’s Panel on Financial Affairs.

The tax break would apply to residents who voluntarily top up their Mandatory Provident Fund (MPF) account or save with deferred annuities. It would only be applicable on deferred annuity products with a total premium of at least $180,000 and a minimum payment period of five years.

The government is also mulling to expand the tax deduction – which currently only covers MPF mandatory contributions by employees – to their voluntary contributions as well, provided that citizens put them in a separate Tax Deductible Voluntary Contribution account.

The move is the latest in a series of government efforts which aim to cater to Hong Kong’s rapidly ageing demographic which are expected to account for almost a third (36,6%) of the population by 2066.

Also read: Hong Kong's staggering surplus earmarked for ageing population

"Due to the increase in the elderly population and shrinking of the working age population, the overall dependency ratio is projected to rise from 397 in 2016 to 844 in 2066," Deputy Commissioner for Census & Statistics Marion Chan said in an earlier report.