Senior Hongkongers evaluating such investment products should be cautious about non-guaranteed payouts, a broker says
HSBC, Manulife and BOC Life are among the financial firms courting retirees with new investment products that offer regular income streams amid a broader government-led initiative to capture opportunities in the so-called silver economy.
The city's biggest lender, HSBC, last week launched five retirement-solution funds, which offer a non-guaranteed target dividend payout rate of 6 per cent a year. More retirement-focused funds would be added to the suite in the second half of 2025, the bank said.
The target payout rate is higher than HSBC's interest rates on time deposits, which are currently between 2 and 3 per cent a year depending on tenure.
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"In light of the growing importance of addressing longevity risk in Hong Kong, we have developed a specialised suite of post-retirement funds designed to provide customers with a predictable monthly income stream while safeguarding the long-term value of their retirement assets," said Sami Abouzahr, head of wealth and premier solutions at HSBC Hong Kong, in a statement to the Post on Monday.
"These funds also align with the government's recent silver economy initiative, which aims to empower the elderly to effectively plan for their retirement."
The funds charge low management fees of 1 per cent, he added. The bank said that the fund manager could adjust the dividend payout rate or even distribute dividends from part of the initial investment.
People aged 65 and above made up 22 per cent of the city's 7.5 million residents last year, according to government data, and senior citizens were expected to account for 31 per cent of the population by 2036.
Manulife, the city's biggest pension provider, also offers a number of retirement products, including an annuity plan that allows policyholders to receive a monthly income for 25 years, while those diagnosed with dementia receive an additional benefit, according to its website.
BOC Life, a unit of Bank of China (Hong Kong), also has a suite of retirement products, including one that pays a non-guaranteed monthly income to policyholders for life after they pay the premium for as little as two years, its website showed.
The company's RetireCation programme, which helps buyers travel and live in 18 mainland cities, including nine in the Greater Bay Area, boosted sales of the company's Income Joy Lifelong Insurance Plan after the programme's launch late last year, said CEO Wilson Tang.
"Since the launch of the new product, the annualised premium of the new product has exceeded HK$1.4 billion, becoming our new growth driver in 2025," he said.
Deputy Chief Secretary for Administration Warner Cheuk Wing-hing, who is leading a task force dedicated to tapping the silver economy, noted in May the huge purchasing power of older residents.
Spending by people aged 60 and above reached about HK$342 billion (US$44 billion) in 2024, accounting for about 11 per cent of the city's gross domestic product, and economic advisers estimate the figure will reach HK$496 billion by 2034, Cheuk said when the government rolled out a range of silver economy measures.
"As Hong Kong develops the silver economy, an increasing number of financial firms have been racing to offer retirement solutions for people to have a regular income after retirement," said Kenrick Chung, chief corporate solutions officer at Bay Insurance Brokers.
However, he cautioned investors about jumping into such products without fully understanding the terms.
"Many of these retirement funds do not have a guaranteed rate, and investors may eventually lose money if the market does not perform well," he said.
Chung said that to achieve a stable income stream, retirees should consider options with guaranteed payouts, such as an annuity plan offered by the Hong Kong Mortgage Corporation (HKMC). Retirees can also consider other annuity products from insurers, with the most important factor being their tolerance for risk.
The government-owned HKMC's annuity plan, introduced in 2018, provides lifelong monthly payments at an internal rate of return of about 4 per cent, in lieu of a lump-sum payment. About 40,000 senior citizens over 60 have invested HK$23 billion in the scheme since its launch, according to data from HKMC.
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