Hong Kong's HK$10bn (US$1.27bn) public annuity plan has received a mixed response since application forms were made available through 20 local banks this week.
The forms have been available at 700 branches of local banks since Monday, with registration for the scheme open from 19 July until 8 August. If popular, the government will double the amount it will accept to HK$20bn.
The plan, managed by the government agency Hong Kong Mortgage Corporation Annuity (HKMC Annuity), allows senior citizens aged 65 years or above to turn part of their savings into life-long fixed annuity income. Hong Kong has 1.3 million people who are 65 or older . This age group forms 18% of the total population at present, a proportion expected to increase to 31% by 2036.
The scheme allows residents to invest a maximum lump sum of HK$1 million, which will earn women HK$5,300 every month and men HK$5,800. The minimum investment of HK$50,000 will earn women HK$265 a month and men HK$290. The monthly payments are for life and the government will shoulder any losses.
The annuity plan can be surrendered within the guaranteed period but may incur a loss. There is no death benefit after the guaranteed period.
The low returns promised and difference in earnings for men and women dominate the response to the scheme.
An HKMC Annuity spokesman said the difference in earnings for men and women was down to men’s lower life expectancy, a consideration also adopted by the insurance industry. The rate of returns are the same for both genders if life expectancy is taken into account.