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Hong Kong’s Senior Citizens Face New Investment Opportunities and Risks
As the population of Hong Kong continues to age, financial institutions are increasingly targeting retirees with new investment products designed to provide regular income streams. These offerings come amid a broader government initiative aimed at capitalizing on the opportunities presented by the so-called “silver economy.” However, experts caution that investors should be cautious about the non-guaranteed nature of some of these products.
Financial Institutions Launch Retirement-Focused Funds
HSBC, one of Hong Kong’s largest lenders, recently launched five retirement-solution funds, which promise a non-guaranteed target dividend payout rate of 6% annually. The bank plans to add more retirement-focused funds to its portfolio in the second half of 2025. This move comes as the bank aims to help customers manage longevity risk while ensuring the long-term value of their retirement assets.
The target payout rate is significantly higher than the interest rates offered on time deposits, which currently range between 2% and 3% per year depending on the tenure. HSBC also emphasized that the funds charge low management fees of 1%, and the fund manager has the flexibility to adjust the dividend payout rate or even distribute dividends from part of the initial investment.
Growing Importance of the Silver Economy
According to recent government data, people aged 65 and above accounted for 22% of Hong Kong’s population of 7.5 million in 2024. This proportion is expected to rise to 31% by 2036, highlighting the growing significance of the silver economy. In response, several financial firms have introduced retirement products tailored to this demographic.
Manulife, the city’s leading pension provider, offers an annuity plan that allows policyholders to receive monthly income for 25 years. Additionally, those diagnosed with dementia may receive extra benefits. BOC Life, a unit of Bank of China (Hong Kong), also provides retirement products, including one that pays a non-guaranteed monthly income for life after a minimum premium payment period of two years.
Government Initiatives and Economic Impact
The government has been actively promoting the silver economy, recognizing the substantial purchasing power of older residents. Deputy Chief Secretary for Administration Warner Cheuk Wing-hing highlighted that spending by people aged 60 and above reached approximately HK$342 billion (US$44 billion) in 2024, accounting for about 11% of the city’s gross domestic product. Economic advisers estimate this figure could reach HK$496 billion by 2034.
The government has rolled out a range of measures to support the silver economy, including programs that cater to the needs of senior citizens. One such initiative is BOC Life’s RetireCation programme, which enables buyers to travel and live in 18 mainland cities, including nine in the Greater Bay Area. This program boosted sales of the company’s Income Joy Lifelong Insurance Plan, with annualized premiums exceeding HK$1.4 billion since its launch.
Caution Advised for Investors
Despite the growing number of retirement solutions available, experts warn that investors should not rush into these products without fully understanding the terms. Kenrick Chung, chief corporate solutions officer at Bay Insurance Brokers, noted that many of these retirement funds do not guarantee a fixed return, and investors could potentially lose money if the market performs poorly.
Chung recommended that retirees consider options with guaranteed payouts, such as annuity plans offered by the Hong Kong Mortgage Corporation (HKMC). The HKMC’s annuity plan, introduced in 2018, provides lifelong monthly payments at an internal rate of return of about 4%. Since its launch, around 40,000 senior citizens over 60 have invested HK$23 billion in the scheme.
Retirees should also assess their risk tolerance when choosing retirement products. While some investments may offer higher returns, they often come with greater volatility. It is essential for individuals to carefully evaluate their financial goals and seek professional advice before making any investment decisions.
