At an MPFA Management Board meeting held last Friday, it was decided that, in order to drive down fees and “provide better retirement protection for the working population of Hong Kong”, the government should consider four key approaches.
- 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 / or
- Introducing a not-for-profit operator to operate a simple and low-fee MPF scheme.
MPFA chairman Anna Wu said it has made the proposals as it is “acutely aware” of public concerns over the fee levels of MPF funds, while also noting that MPFA efforts had helped reduce average fees from 2.1% in 2008 to 1.74% in 2012 – a reduction she said is “not satisfactory”.
“Retirement systems usually take 30 to 40 years to mature,” said Wu. “The MPF System which will have its 12th anniversary in a few days is still a relatively new system. With the System entering its second decade of operation, it is the right time to consider more substantial changes.
“The MPF System is a social policy aimed at providing retirement benefits to the working population. Purely relying on market forces to set fee levels may not be enough and more needs to be done.
“The reform proposals are only conceptual ideas, they need to be thoroughly studied, analysed and, more importantly, debated in the community.”
On the first of this month, employees were, for the first time, allowed to take some control over their investment in an MPF scheme – click here to read more.
