Study backs shift to mandatory provident fund

The Social Security Fund recently released a study on the current status and development of the Non-Mandatory Central Provident Fund, recommending the continuation of non-mandatory participation for now, while a scholar suggested establishing a two- to three-year transition period to implement a mandatory Central Provident Fund system.

Macau’s non-mandatory Central Provident Fund system has been in operation since 2018. According to the 2021 review report, the non-mandatory Central Provident Fund was set to transition to a mandatory system after three years, had the Covid-19 pandemic not intervened.

However, a new review report released on the last day of 2025, commissioned by the Social Security Fund and conducted by a University of Macau (UM) research team in 2024, revised this recommendation.

It now suggests establishing a three-year economic observation period from 2021 to 2023 to assess Macau’s economic recovery and cautiously plan the transition of the Central Provident Fund system to mandatory status.

The report indicates that maintaining voluntary participation for the time being remains under consideration. According to the report, while Macau’s economy is recovering in an orderly manner, the pace of recovery varies across industries.

“Although the overall economy shows steady improvement, recovery remains uneven across sectors,” it was noted, adding that small- and medium-sized enterprises face greater operational uncertainties, despite a relatively robust recovery in the large-scale integrated leisure sector. It also noted that, by the third quarter of 2024, Macau’s real gross domestic product (GDP) had recovered to approximately 86.3% of its 2019 level.

Meanwhile, according to the report, since 2010, the government has provided a one-time incentive basic payment of MOP10,000 to eligible account holders, resulting in cumulative investments exceeding MOP31.8 billion.

Qualified Macau residents’ individual accounts, including interest, have received allocations totaling over MOP100,000 each.

As of October 2024, 320 employers had established collective provident fund plans, with employee participation surging more than twelvefold – from 2,327 individuals in 2018 to 30,721.

A cumulative total of 81,644 individuals have opened personal provident fund plans, and the number of retirement funds rose to 43 in 2024, up by four since 2018. By September 2024, the total assets in the non-mandatory Central Provident Fund, within these 43 retirement funds, amounted to approximately MOP9.9 billion, reflecting a significant increase in contributions and participation since 2018.

The review report concluded that mandatory Central Provident Fund contributions would not impose an excessive burden on employers. Estimates indicate that between 2023 and 2032, the average mandatory Central Provident Fund contributions will account for 0.63% and 0.54% of employer income for the “all employers” and “SME employers” categories, respectively.

Employees will be able to build more substantial retirement savings through longer and more sustained contributions.

In remarks regarding the non-mandatory provident fund review report, Chan Kin Sun, an UM assistant professor and a participant in the study, noted that society broadly supports the idea of mandatory provident funds. He pointed out that the report intentionally avoids setting a timeline for implementation, instead suggesting that the government should reconsider the matter at its discretion once specific conditions are met. Chan recommended that authorities establish a buffer period to allow society to adapt when implementing a mandatory Central Provident Fund in the future.

Separately, Cheng Ka Man, a lawyer and member of the Macau Federation of Trade Unions, emphasized that employers should shoulder social responsibilities by providing retirement security for their employees. She framed employer contributions as “deferred wages” – a crucial component of employees’ actual compensation rather than just a mandatory investment plan for wealth accumulation.

Cheng noted that it requires decades of contributions to yield meaningful results, and that the earlier individuals participate, the greater their retirement reserves will be. She advocated for authorities to conduct annual reviews of Macau’s GDP and industry revenue and expenditure levels to determine whether they meet activation criteria.

“Once the three conditions outlined in the report are satisfied – which include real GDP and industry revenue and expenditure substantially reaching 2019 levels – she urged that timely legislative amendments be initiated, she reportedly stated.