MPF reforms to reduce fees

Better retirement protection is the goal of reforms.

The Mandatory Provident Fund Schemes Authority has tabled proposals to reform the MPF System. The goal is to further reduce MPF fees to provide better retirement protection for Hong Kong's workers.

The authority’s Management Board agreed to suggest fundamental changes to the system. These include capping the fees of MPF funds; mandating various types of low-fee funds in each MPF scheme; providing a type of basic, low-fee, default fund arrangement; and introducing a not-for-profit operator to operate a simple and low-fee MPF scheme.

Authority Chairman Anna Wu said the authority is acutely aware of public concerns over the fee levels of MPF funds.

“We have made efforts in the past to bring fees down, and fees have come down from 2.1% in early 2008 to 1.74% in 2012, but we consider this level of reduction is not satisfactory.”

She said the MPF system affects more than two million workers and all employers. It also plays an important role in shaping the retirement landscape in Hong Kong.

In the short to medium term, the authority will work on the recommendations of the Consultancy Study on MPF Trustees’ Administration Costs, which was released this week.

On short-term measures, the authority’s Managing Director Diana Chan said the authority is committed to further driving fees down and will immediately launch four programmes to urge trustees to introduce various types of low-fee funds for each scheme and to promote these funds; facilitate trustees in further automating and streamlining their administration processes; facilitate members in consolidating their personal accounts; and, facilitate trustees to merge smaller scale or less efficient schemes and funds.