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Hong Kong Shue Yan College ECON 310 Financial Institutions in Hong Kong Term Paper 2006 Fall

Hong Kong Shue Yan College ECON 310 Financial Institutions in Hong Kong Term Paper 2006 Fall. The Comparison between the MPFs provided by Bank (HSBC) and Insurance Company (Manulife). Section 4, Group 6. 044012 Christy, Cheung Wai Hung 044013 Annie, Chong Suet Yan

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Hong Kong Shue Yan College ECON 310 Financial Institutions in Hong Kong Term Paper 2006 Fall

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  1. Hong Kong Shue Yan CollegeECON 310Financial Institutions in Hong KongTerm Paper 2006 Fall

  2. The Comparison between the MPFs provided byBank (HSBC) and Insurance Company (Manulife)

  3. Section 4, Group 6 • 044012 Christy, Cheung Wai Hung • 044013 Annie, Chong Suet Yan • 044018 Roxanne, Yu Kwan Yee • 044028 Carrie, Ho Ka Lai • 044040 Quin, Leung Pui Shan • 044052 Katy, Lee Wai Kit

  4. Introduction of MPF pension plan

  5. What is a pension plan? • an asset pool • represent the fastest-growing financial intermediary.

  6. Reasons pension plan becomes popular • Life expectancy increase • Ageing problem

  7. Type of pension plans • Private Pension Plans • Public pension Plan • Sponsored by a governmental body. e.g., MPF

  8. Public pension Plan Mandatory Provident Fund (MPF)

  9. Key features of the MPF • Coverage and Exemption • Coverage: Employee, Employer, Self-Employed Person • Exempt persons: Domestic employees, Self-employed hawkers;

  10. Key features of the MPF • Contributions • Both employers and employees pay a minimum contribution of 5% of relevant income • Self-employed persons have to contribute 5%.

  11. Key features of the MPF • minimum and maximum levels of relevant income are: • Minimum - HK$4,000 per month • Maximum - HK$20,000 per month • can withdraw accrued benefits in a lump sum at the age of 65

  12. Key features of the MPF • Immediate Vesting Contributions paid and investment earnings are fully and vested with the member as accrued benefits.

  13. Key features of the MPF • Portability When a member changes job, benefits can be transferred • Preservation Benefits will be preserved and became payable at age of 65 or die

  14. Description of HSBC and Manulife Background of HSBC

  15. Background of HSBC • one of the world’s largest banking and financial services organizations • operated in Hong Kong more than 140 years • has over 9,700 offices in 77 countries and territories

  16. Background of HSBC • The leader position in the pension market • HSBC and subsidiary Hang Seng Bank have secured 400,000 employees for MPF • 40% targeted market share in the MPF business.

  17. MPF Product in HSBC • HSBC offers two master trust schemes • SuperTrust • SuperTrust Plus

  18. SuperTrust MPF Scheme • members with less investment experience • investment time frames from short to long term

  19. SuperTrust MPF Scheme • 5 different funds • Capital Preservation Fund (low-risk) • Guaranteed Fund (low-risk) • Balanced Fund (medium-risk) • Growth Fund (high-risk) • Hang Seng Index Tracking Fund (high-risk)

  20. SuperTrust Plus MPF Scheme • members with a greater investment knowledge and experience • In addition to 5 SuperTrust Funds, it offers 5 more funds

  21. SuperTrust Plus MPF Scheme • Stable Growth Fund (medium-risk) • Asian Equity Fund (high-risk) • European Equity Fund (high-risk) • Hong Kong Equity Fund (high-risk) • North American Equity Fund (high-risk)

  22. HSBC MPF Service • Quality MPF Management • Keeping information up to date • Smart Money Management and Fund Switching

  23. HSBC MPF Service • providing convenient communication • Hotline • Website • Branch and ATM network

  24. Description of HSBC and Manulife Background of MAULIFE

  25. Background of MAULIFE • conducts business in Hong Kong for more than 100 years • expanded into MPF market since 2000 • one of the largest player in the MPF market (15.5% market share)

  26. Background of MAULIFE • more than 720,000 pension accounts • managing pension assets at about HK$307 billion

  27. MPF Product in MANULIFE • Two MPF schemes • Manu-Lifestyle (MPF) Scheme • Manulife Global Select (MPF) Scheme

  28. Manu-Lifestyle (MPF) Scheme • provided to conservative investors • Simple and efficient approach

  29. Manu-Lifestyle (MPF) Scheme • 5 different Funds • Capital Preservation Fund • Interest Fund • Stable Fund • Growth Fund • Aggressive Fund

  30. Manulife Global Select (MPF) Scheme • provided to sophisticated and conservative investors • offers a choice of investment expertise and extensive range of funds

  31. Manulife Global Select (MPF) Scheme • provides eleven more funds than Manu-lifestyle Scheme • provide a very aggressive high-risk option • Manulife MPF China Value Fund

  32. Manulife MPF Service • computerized call center • personal visits • customer-oriented seminars

  33. Manulife MPF Service • Newsletters • regular benefit statements • on-line service centre • Smart Call telephone service.

  34. Comparison between the MPF Scheme of HSBC and Manulife

  35. III. Comparison between the MPF Scheme of HSBC and Manulife • Two MPF Scheme • Low-risk Fund • Medium-risk Fund • Aggressive High-risk Fund

  36. Manu-lifestyle Scheme vs. HSBC Super Trust Scheme

  37. Manu-lifestyle Scheme vs. HSBC Super Trust Scheme • provided to conservative investors • provided to less investment experience investor

  38. Manu-lifestyle Scheme vs. HSBC Super Trust Scheme • Conservative Low-Risk Fund • Manulife • Capital Preservation Fund • Interest Fund • HSBC • Capital Preservation Funds • Guaranteed Fund

  39. Manu-lifestyle Scheme vs. HSBC Super Trust Scheme • Capital Preservation Funds • mandated by the MPF Schemes Ordinance • do not have a guarantee of capital and interest

  40. Manu-lifestyle Scheme vs. HSBC Super Trust Scheme • invest in grade Hong Kong dollar denominated monetary instruments

  41. Manu-lifestyle Scheme vs. HSBC Super Trust Scheme • Manulife Capital Preservation Fund • mainly hold Hong Kong Bonds • stable return as the prescribed savings rate published by the MPFA • HSBC Capital Preservation Fund • 100% hold in Hong Kong dollar denominated monetary instrument • achieve a rate of return higher than the average bank saving rate

  42. Manu-lifestyle Scheme vs. HSBC Super Trust Scheme

  43. Manu-lifestyle Scheme vs. HSBC Super Trust Scheme • Manulife MPF Interest Fund • fully hold in Hong Kong Bonds • interest rate is determined by the bond interest • HSBC Guaranteed Fund • nearly 50% hold in equity • provide 0.25% interest rate per annually

  44. Manu-lifestyle Scheme vs. HSBC Super Trust Scheme • conservative medium-risk fund • Manulife MPF Stable Fund vs. HSBC Balanced Fund • Provide capital growth

  45. Manu-lifestyle Scheme vs. HSBC Super Trust Scheme • HSBC invest more equity than Manulife

  46. Manu-lifestyle Scheme vs. HSBC Super Trust Scheme • Manulife MPF Stable Fund • mainly in bonds • with an interest guarantee upon the occurrence of certain pre-determined events • HSBC Balanced Fund • Assets Portfolio mainly in equity • No interest guarantee

  47. Manu-lifestyle Scheme vs. HSBC Super Trust Scheme • Compare the Aggressive high-risk fund • Manulife • Growth Fund • Aggressive Fund • HSBC • Growth Fund • Hang Seng Index Tracking Fund

  48. Manu-lifestyle Scheme vs. HSBC Super Trust Scheme

  49. Manu-lifestyle Scheme vs. HSBC Super Trust Scheme • Growth Funds • helped to maximize the investment return • mainly in equity

  50. Manu-lifestyle Scheme vs. HSBC Super Trust Scheme • Manulife Aggressive Fund vs. HSBC Hang Seng Index Tracking Fund • Provide long term capital growth

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