Principal Likes Hong Kong Retirement Market

Guoco founded Dao Heng in 1981. Dao Heng began getting more attention in 2000, when Hong Kong introduced the Mandatory Provident Fund system. The system requires employers to contribute 5% of almost all employees’ annual income, up to a maximum of $1,000 per year per employee, to the provident funds. Employees earning more than a minimum income also must contribute to the funds.

The MPF system now manages the equivalent of about $13 billion in assets, and it has a projected compound annual growth rate of 25%, according to Norman Sorensen, president of Principal’s Principal International Inc. unit.

Principal has been doing business in the Hong Kong retirement market since 1996, but the Dao Heng deal “is an extraordinary opportunity for the Principal to secure its position as one of the key players in Hong Kong’s fast-growing retirement market,” Sorensen says in a statement.