China is blocking fleeing Hong Kongers from getting their retirement money

The busy streets of HongKong
As tens of thousands flee Hong Kong for a new life in the UK, they’re confronting the risk that they will be forced to leave behind their retirement savings. (PHOTO: Getty Creative) · danielvfung via Getty Images

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By Bloomberg News

(Bloomberg) — As tens of thousands flee Hong Kong for a new life in the UK, they’re confronting the risk that they will be forced to leave behind their retirement savings as China intensifies its crackdown on the city’s freedoms.

Scores are being denied access to money in the Mandatory Provident Fund because of the cascading impact of Beijing’s decision in January to withdraw recognition of British National Overseas passports as valid official documents.

The UK government anticipates more than 300,000 residents will use the passport to leave Hong Kong, putting billions of dollars at risk of being trapped. About 30,000 visa applications under the so-called BN(O) passports were made in the first quarter of 2021 alone.

The city’s retirement fund has told account providers that these passports can’t be used to prove departure from Hong Kong, a pre-requisite for early access to funds. Trustees, which include major institutions like HSBC Holdings Plc, Manulife Financial Corp., AIA and Sun Life Financial Inc., now aren’t allowed to release the money to those who’ve relocated on the passports.

A 37-year-old real estate professional who participated in Hong Kong’s unprecedented street protests in 2019 said his request to access his funds in the city’s Mandatory Provident Fund (MPF) had been repeatedly rejected even after he resubmitted his application with his British residency permit.

Struggling to find work in London in the middle of the Covid-19 lockdown, the lack of access to the money has deprived him of a crucial cushion — he says his MPF money with Manulife would be equivalent to more than a year and half’s rent.

Manulife said it follows industry practices and regulatory requirements when processing applications.

One couple who moved to the UK in April have about HK$400,000 (US$51,350) stuck in two retirement accounts in Hong Kong. Initially, HSBC staff accepted their documents and told them to expect approval in three weeks. Then the company asked for more documents, including a housing lease in the UK., along with electricity and water bills. Despite providing this, HSBC didn’t approve their withdrawal, they said.

“As with all MPF service providers, we follow the regulator’s requirements for processing applications related to early withdrawal of accrued benefits by MPF scheme members,” HSBC said in a statement.

An accountant in her 30s, now in London, said she has more than HK$500,000 worth of funds that are stuck, mostly held by Principal Trust Co. (Asia) and AIA. In May, she applied to withdraw her savings from Principal, but the firm rejected her request, while AIA is yet to respond to a similar request.