'Hong Kongers Fleeing to UK Leave $3.8 Billion Trapped Behind', Bloomberg UK

The city’s most recent security law is prompting thousands to leave, but their retirement savings are caught in a geopolitical battle.

As China tightens its control over Hong Kong, a wave of residents are permanently relocating to the UK and leaving their retirement money trapped behind in the Asian financial hub.

Normally, anyone leaving Hong Kong on a long-term basis is entitled access to savings they have accrued in Hong Kong’s compulsory pension system, the Mandatory Provident Fund. But Hong Kongers who emigrate using a British National (Overseas) passport can’t use that to withdraw their money before the retirement age of 65, the Mandatory ProvidentFund Schemes Authority said.

For those moving to the UK, not being able to access their pension money has palpable financial impacts. Recent cases include a woman who left in fear of repercussions from her role in protests and now has thousands of dollars trapped in her pension fund; a middle-aged man born and raised in Hong Kong has vowed never to return and is shut out from his nest egg of more than $60,000; and another who is struggling to buy an apartment in the UK because his down payment is stuck on the other side of the world.

Emigration has been top of mind for many residents after Hong Kong’s government in March passed Article 23, a domestic security law that was fast-tracked at Beijing’s urging, and which has been harshly criticized by foreign governments for curbing fundamental freedoms.

“With Article 23, there will be more people trying to leave Hong Kong, more people trying to get early withdrawals to build their new lives, and more denials,” said Megan Khoo, research and policy advisor at Hong Kong Watch, which estimates that people who emigrated to the UK using the BN(O) passport have been denied access to more than $3.8 billion in retirement savings since 2021.

BN(O) passports give people born before Hong Kong was handed back to China in 1997 and their families the right to move to the UK and a pathway to full British citizenship, with more than 140,000 people using the emigration route since it was expanded by then UK Prime Minister Boris Johnson in 2021.

In the first quarter of 2024, applications for BN(O) passports were the highest in almost two years, doubling to 9,693 from the previous period, according to the most recent data from the UK government.

Hong Kong’s Immigration Department referred Bloomberg News to the Mandatory Provident Fund Schemes Authority.

Geopolitical Tension

Since the UK handed Hong Kong back to China, the city has operated under a “one country, two systems” principle, meaning that the city is part of China but retains its own economic and social systems. In fact, the city’s mini constitution requires the city to make its own law to protect national security, a mandate that has drawn controversy for decades.

Democracy advocates have long feared the laws would restrict basic freedoms, and protests against it flared across the city from 2019 until Beijing imposed a national security law in 2020 that wiped out many activist groups. For some, that time marked a turning point and spurred them to hatch an escape plan.

That was the case for Leo, a 56-year-old business owner who requested his last name not be used. Born and raised in Hong Kong, he built up a successful food transport company but began to fear for the future after the 2020 security law.

Leo moved to Manchester in 2022 on his BN(O) passport, and in March 2023 started the process of claiming the £50,000 ($65,000) from his HSBC pension account in Hong Kong. The core issue, he said, is that the bank won’t recognize his BN(O) passport as an official document that would allow him to access the cash.

And although he should be able to withdraw the money when he turns 65, he needs the cash now and is concerned about the Hong Kong stock market, which the money is heavily invested in. The Hang Seng Index, which is composed of the the largest companies that trade of the Hong Kong Stock Exchange, is down more than 39% since a peak in February 2021.

A HSBC spokesperson said it follows the MPFA’s requirements for processing early withdrawals.

“In the case of permanent departure, scheme members are required to provide evidence of the right of abode outside of Hong Kong,” the spokesperson said. “The MPFA has publicly confirmed that a BN(O)passport cannot be used as such evidence.”

Fleeing Crackdowns

Others have left Hong Kong after their role in recent protests out of fear of repercussions. Kay, who requested her last name not be used, moved to London using her BN(O) passport in September 2021, after watching fellow protestors face arrests and fearing for her safety.

The 33-year-old who works in tech has pension money in accounts with both HSBC and Manulife, but both have denied her access to the cash, which totals about £2,500. Having those funds would ease her stress overpaying rent and maybe even enable her to get a dog, she said.

After two years of phone calls and bureaucratic headaches, she’s ready to give up hope of getting the money before she turns 65.

Chi, a 52-year-old who left Hong Kong in August 2022, is trying to buy a house in St. Helens, a village near Manchester. But the money for his down payment — about £90,000 — is struck in his Hong Kong pension account with Manulife.

A spokesperson from Manulife said that they abide by relevant regulatory requirements.

Chi and his wife began to consider fleeing Hong Kong after the 2020 security law passed. He got a job in the UK as a picker at a warehouse, but is hoping that his pension money can help improve his family’s finances.

“A lot of Hong Kongers rely on this fund, a lot have a lot of money built up in this,” said Hong Kong Watch’s Khoo. “They need the money to start a new life and the government is blocking it.”

— With assistance from Charlie Wells

This article was written by Claire Ballentine and published in Bloomberg UK on 18 July 2024.