The pensions regulator is considering seeking a law change to allow 2 million employees to choose the trustees of their funds, increasing the choice for workers and forcing providers to cut fees.
The Mandatory Provident Fund Schemes Authority's new chairman, Henry Fan Hung-ling, unveiled the plan yesterday at his first media briefing since taking over for Charles Lee Yeh-kwong last month.
'The average management fee of the MPF is about 2 per cent, which is reasonable at the fund size of about HK$200 billion,' he said.
'However, when the total MPF reaches HK$1 trillion or HK$2 trillion, the management fee should be lower, otherwise the 19 trustees will enjoy an excessive profit.'
Mr Fan said that since bosses were allowed to choose the MPF trustee for their staff, trustees did not feel the need to cut their fees.
'We have seen no fee reduction in the past seven years,' he said. 'This is because many MPF trustees are big banks, which have a business relationship with the bosses.'
Mr Fan said the law should be changed to let workers have the freedom to change their MPF trustee. 'If the employees have a choice, the 19 trustees will compete with each other for clients and such competition pressure would force them to cut their fee,' he said.