MPF revision opens door to Hong Kong advisers
From Asia Feb 1 2012 BY: Simon Danaher
, Online News Editor
, International Adviser
An overhaul of the mandatory provident fund scheme in Hong Kong, which will allow employees to choose which MPF provider they use, is being eagerly anticipated by advisers.
Employees currently contribute 5% of their salary, capped at HK$1,000 ($130) a month, to a retirement account. This is matched by employers, who also choose the MPF provider.
In November, the MPF Schemes Authority is due to introduce Employee Choice Accounts, which will put the choice of provider in the hands of employees, opening the market up to financial advisers to help with that decision.
The government hopes the scheme will put performance and fee pressure on MPF providers.
Under the MPF system, IFAs can advise clients on their MPF investments by sitting the MPF Intermediaries Examination. According to Harpreet Sajjan, head of portfolio management at Platinum Financial Services, many are now taking the exam in order to be eligible to advise clients on this “new” market.
But Mark Rawson, chief executive of The Henley Group in Hong Kong, is sceptical about the motivation some advisers have.
“We can see IFAs obtaining their MPFA licences, not because they want to give advice on MPFs, as that option and indeed client requirement has always been there, but because they can now earn commissions for encouraging transfers,” Rawson said.