Manulife launches market’s first MPF retirement income fund, aiming to provide regular and stable income in retirement

Manulife launches market’s first MPF retirement income fund, aiming to provide regular and stable income in retirement

HONG KONG, Sept. 17, 2020 /PRNewswire/ —

For Manulife Global Select (MPF) Scheme

Important to note:

·         You should consider your own risk tolerance level and financial circumstances before making any investment choices. When, in your selection of constituent funds or the Default Investment Strategy (“DIS”), you are in doubt as to whether a certain constituent fund or the DIS is suitable for you (including whether it is consistent with your investment objectives), you should seek independent financial and/or professional advice and make investment choices most suitable for you taking into account your circumstances.

·         The asset allocation of the Manulife MPF Core Accumulation Fund and the Manulife MPF Age 65 Plus Fund (“DIS CFs”) in the DIS and some of the constituent funds which are referred to as Retirement Funds will change over time and hence the risk profile and return will also change over time. The DIS CFs or the Retirement Funds may not be suitable for all members. You should understand the relevant risks involved before investment and consider factors other than age and review your own investment objectives.

·         The Manulife MPF Interest Fund and the Manulife MPF Stable Fund (collectively the “Guaranteed Funds”) under the scheme each invests solely in approved pooled investment funds in the form of insurance policy provided by Manulife (International) Limited. The guarantee is also given by Manulife (International) Limited. Your investments in the Guaranteed Funds, if any, are therefore subject to the credit risks of Manulife (International) Limited. Please refer to sections 3.4.2 (Manulife MPF Stable Fund (the “Stable Fund”)) and 7.2.4(b) (Manulife MPF Stable Fund) and sections 3.4.1 (Manulife MPF Interest Fund (the “Interest Fund”)) and 7.2.4(c) (Manulife MPF Interest Fund) of the MPF Scheme Brochure for details of the credit risks, guarantee features and qualifying conditions.

·         The Manulife MPF Retirement Income Fund (the “Retirement Income Fund”) does not guarantee distribution of dividend, the frequency of distribution, and the dividend amount/yield.  Dividends may be paid out of the realized capital gains, capital and/or gross income while charging/paying all or part of the fees, charges and expenses to/out of the capital, resulting in an increase in distributable income available for dividend distribution. Payment of dividends out of capital and/or effectively out of capital represent a withdrawal of part of the original investment or from any capital gains attributable to that original investment. Distribution of dividends will result in an immediate decrease or adjustment in the net asset value per unit of the Retirement Income Fund on the ex-dividend date.

·         Members who are below age 65 should note that the regular and frequent distribution of dividends and reinvestment of such dividends into the Retirement Income Fund will inevitably involve an investment time-lag during which dividends are not reinvested and it is subject to out-of-market risk on a recurring basis (currently, on a monthly basis). With the feature of dividend distribution, the return of the Retirement Income Fund for these members may be impacted negatively or positively as its net asset value per unit may have gone up or down at the time when dividends are reinvested. Therefore the return of the Retirement Income Fund for these members may deviate from that of a constituent fund with similar investment portfolio without such arrangement and may not always be advantageous to these members.

·         Investment involves risks and not each of the constituent funds would be suitable for everyone. You should consider the risks associated with each of the constituent funds and the DIS and your investments/accrued benefits may suffer loss.

·         Before making your investment choices, you should read the MPF Scheme Brochure for details including risk factors, fees and charges of the scheme. You should not make your investment decision based on this material alone.

Manulife today announced the launch of Hong Kong’s first retirement income fund in the MPF market to address MPF members’ needs from pre-retirement wealth accumulation to post-retirement regular dividend distribution[1].

Raymond Ng, Vice President and Head of Employee Benefits at Manulife Hong Kong, introduces the upcoming Manulife MPF Retirement Income Fund. It is the first investment solution in the MPF market that covers pre-and post-retirement stages, aiming to provide regular and stable income to retirees through dividend distribution.
Raymond Ng, Vice President and Head of Employee Benefits at Manulife Hong Kong, introduces the upcoming Manulife MPF Retirement Income Fund. It is the first investment solution in the MPF market that covers pre-and post-retirement stages, aiming to provide regular and stable income to retirees through dividend distribution.

The launch of the Manulife MPF Retirement Income Fund (“the Fund”) enhances the competitiveness of our comprehensive fund platform. With the new addition,  the total number of constituent funds available through the Manulife Global Select (MPF) Scheme is 30. The scheme offers MPF members a variety of investment choices across different asset classes and markets so that they can design an MPF portfolio to suit their retirement needs and investment appetite.

This echoes the Mandatory Provident Fund Schemes Authority’s (MPFA) call for the development of retirement solutions under the MPF system that more effectively meet scheme members’ investment needs in both the contribution and the withdrawal phases.

The Fund seeks to provide regular and stable income[1] by way of distribution of dividend[2] to members MPF accounts, with the secondary objective of generating long-term capital growth. When members aged below 65, the monthly dividend[2] is automatically reinvested in the Fund seeking to help drive that capital growth. When aged 65 or above, the monthly dividend will be distributed to the designated Manulife MPF Interest Fund (“Interest Fund”)[3], which will provide a capital guarantee[4].

“As the largest MPF scheme sponsor[5] in Hong Kong, we are proud to lead the market by being the first MPF provider to introduce this holistic retirement solution to meet both pre- and post-retirement needs of the working population here,” said Raymond Ng, Vice President and Head of Employee Benefits at Manulife Hong Kong. “It is an exciting news for Manulife MPF members who wish to continue to stay on our MPF platform to invest as they retire. With our wealth of more than 80 years of pension management experience, we are confident that our MPF platform provides quality options for our members.”

“The Fund offers flexibility in that it has no entry age limit, no investment or contribution threshold, and no minimum investment period. It serves as a new choice for members as the Fund targets to grow their capital before retirement and preserve their dividends upon retirement. It also has a new concept of dividend mechanism(dividends to be allocated to members’ accounts within 10 business days from the ex-dividend date)[6], retirees may enjoy a steady stream of income,” Mr. Ng continued.

Stages

Designated constituent funds of dividend
distribution

Pre-retirement (below age 65)

Manulife MPF Retirement Income Fund[6] 

Post-retirement (age 65 or above)

Manulife MPF Interest Fund[7] 

As soon as members reach the statutory retirement age of 65, they will enjoy a privileged rate of 0.99% per annum of net asset value on management fees by way of bonus unit rebate. This compares with fees of 1.3% at the pre-retirement stage (below age 65).

“This year marks the twentieth anniversary of the MPF system and the introduction of market’s first MPF retirement income fund will further complement the MPF fund platform, offering MPF members a new option in retirement planning and therefore benefiting Hong Kong’s working population.” Mr. Ng said.  

Earlier this year, Manulife conducted a research[8] to better understand public acceptance of an MPF post-retirement solution. The survey found that nearly half of all the respondents (49%) were keen to add such a solution to their MPF portfolios. The top three features most welcomed by respondents were dividend payments (52%), a stable income after retirement (48%), and low risk (30%).

Among those interested in such a post-retirement solution, the majority (77%) said they would re-allocate their existing MPF portfolios to include it, with most (74%) saying they would allocate more than 20% of their portfolios to it. The remainder of this group (23%) preferred to make additional voluntary contributions to include such a solution in their MPF portfolios.

Before the launch of the Fund, Hong Kong people have three ways to manage their MPF upon retirement: withdraw all MPF benefits in a lump sum; withdraw their MPF benefits by instalments; or keep their MPF benefits in their accounts for continuous investment.

Appendix

Fund Facts

Fund Name

Manulife MPF Retirement Income Fund

Investment objectives and
policies

Provide regular and stable income[9] by way of distribution of dividend[10], with the
secondary objective of generating long-term capital growth.

Invest on a diversified basis with around 20% to 60% of the underlying portfolio
indirectly invested in equities and equity-related investments, with the
remainder of the assets indirectly invested in bonds, deposits and other
investments as permitted under the Mandatory Provident Fund Schemes
(General) Regulation.

Launch date

September 21, 2020

Current level of management
fees

1.30% per annum of net asset value (NAV)

Privileged rate on
management fees for retirees

0.99% per annum of NAV by way of a monthly bonus unit rebate at a rate of
0.31% per annum (for members aged 65 or above only)

About Manulife Hong Kong

Manulife Hong Kong, through Manulife International Holdings Limited, owns Manulife (International) Limited, Manulife Investment Management (Hong Kong) Limited and Manulife Provident Funds Trust Company Limited. As a member of the Manulife group of companies, Manulife Hong Kong offers a diverse range of protection and wealth products and services to individual and corporate customers in Hong Kong and Macau. 

About Manulife

Manulife Financial Corporation is a leading international financial services group that helps people make their decisions easier and lives better. With our global headquarters in Toronto, Canada, we operate as Manulife across our offices in Canada, Asia, and Europe, and primarily as John Hancock in the United States. We provide financial advice, insurance, and wealth and asset management solutions for individuals, groups and institutions. At the end of 2019, we had more than 35,000 employees, over 98,000 agents, and thousands of distribution partners, serving almost 30 million customers. As of June 30, 2020, we had C$1.2 trillion (HK$6.8 trillion) in assets under management and administration, and in the previous 12 months we made C$30.6 billion in payments to our customers. Our principal operations are in Asia, Canada and the United States where we have served customers for more than 155 years. We trade as ‘MFC’ on the Toronto, New York, and the Philippine stock exchanges and under ‘945’ in Hong Kong.

[1]  Manulife MPF Retirement Income Fund does not provide any guarantee on the capital or investment return or dividend amount/yield. There is no assurance on the dividend distribution frequency and the dividend amount/yield may fluctuate. Dividends may be paid out of the realized capital gains, capital and/or gross income while charging/paying all or part of the fees, charges and expenses to/out of the capital, resulting in an increase in distributable income available for dividend distribution. Payment of dividends out of capital and/or effectively out of capital represent a withdrawal of part of the original investment or from any capital gains attributable to that original investment. Distribution of dividends will result in an immediate decrease or adjustment in the net asset value per unit of the Retirement Income Fund on the ex-dividend date. Despite the above, dividends will be allocated to members’ account/sub-account for investment. Please refer to the MPF Scheme Brochure for further details including risk factors.

[2] It is intended that Manulife MPF Retirement Income Fund will distribute dividend on a monthly basis starting from the seventh month (or earlier as advised by the investment manager of the underlying first level approved pooled investment fund if it considers appropriate) after the launch date of September 21, 2020.

[3] The Manulife MPF Interest Fund is a non-unitized bond fund of the Manulife Global Select (MPF) Scheme that provides a capital guarantee and aims to provide members with interest each month at a rate that equals to or exceeds the prescribed savings rate published by the Mandatory Provident Fund Schemes Authority. The actual interest rate shall be declared by Manulife Provident Funds Trust Company Limited at its sole discretion at the recommendation of Manulife (International) Limited at the end of the month. Please refer to sections 3.4.1 (Manulife MPF Interest Fund (the “Interest Fund”)) and 7.2.4(c) (Manulife MPF Interest Fund) of the MPF Scheme Brochure for details  of the credit risks and guarantee features. Manulife (International) Limited is the guarantor.

[4] The guarantee features of Manulife MPF Interest Fund (the “Interest Fund”) are subject to the credit risks of the guarantor. Dividends are credited to and invested in the Interest Fund which is subject to relevant risks such as the credit risks of the guarantor as well as fees and charges applicable to the Interest Fund. Please refer to sections 3.4.1 (Manulife MPF Interest Fund (the “Interest Fund)) of MPF Scheme Brochure for a detailed description of the Interest Fund, particularly the investment objective and risks. 

[5] “Mercer MPF Market Shares Report” as at June 30, 2020 by Mercer (Hong Kong) Limited, in terms of market share of total MPF assets by scheme sponsor.

[6] Members who are below age 65 should note that the regular and frequent distribution of dividends and reinvestment of such dividends into the Retirement Income Fund will inevitably involve an investment time-lag during which dividends are not reinvested and it is subject to out-of-market risk on a recurring basis (currently, on a monthly basis). With the feature of dividend distribution, the return of the Retirement Income Fund for these members may be impacted negatively or positively as its net asset value per unit may have gone up or down at the time when dividends are reinvested. Therefore the return of the Retirement Income Fund for these members may deviate from that of a constituent fund with similar investment portfolio without such arrangement and may not always be advantageous to these members. These members should consider carefully whether the Retirement Income Fund is suitable for them and, if necessary, seek independent professional advice.

[7] Please refer to footnote 3 on page 2 of this Press Release.

[8] Survey conducted from March 31 to April 2, 2020, with 1,021 Hong Kong-based working people, retirees, unemployed and housewives aged 25 or above.

[9] Please refer to Footnote 1 on page 2 of this Press Release

[10] Please refer to Footnote 2 on page 2 of this Press Release

Photo – https://photos.prnasia.com/prnh/20200917/2920529-1?lang=0