Give workers full control over MPF money, lawmakers urge
Legislators have urged the government to give employees full control over their MPF contributions.
The call came as the Mandatory Provident Fund Schemes Authority proposed allowing employees to transfer all their contributions to a scheme of their choice, at least once a year on a lump-sum basis. The procedure would be similar to what happens when employment is terminated, whereby the employee gives written notice to the trustee.
But lawmaker Wong Kwok-hing, of the Federation of Trade Unions, said the proposal did not go far enough.
'It is unreasonable that employees can only transfer contributions made by them, but not the part made by their employers,' Mr Wong said at a Legco panel on financial affairs yesterday. 'Look at the case of Sing Pao Daily News: the employers just took away the money that should have been deposited into the employees' MPF accounts. It shows there is a need for workers to have full control over their own money.'
Mandy Tam Heung-man of the Civic Party accused the government of delaying the plan to give employees the right to manage their contributions. 'When will the employees have their own say about money which is saved for their retirement? We have been waiting for years,' she said.
But the executive director of the authority's regulation and policy, Darren McShane, said allowing an employer's contribution to be transferred would make it difficult to trace, and administration costs might be higher. 'The trustees would also need to revamp their record-keeping systems, which would become very complicated. They would need to keep employee contributions and employer contributions in separate sub-accounts under each member's account.'
He said the authority's proposal could promote greater market competition, which would help to keep fees and charges at a reasonable level.
Manulife, an MPF provider, welcomed the move to allow employees to choose but saw little chance of a pricing war in management fees.
'The total net asset value of the MPF market in Hong Kong is still very low compared to other developed markets such as Australia,' said Belinda Luk, assistant vice-president of employee benefits of Manulife. 'It hasn't reached a critical mass that could lower the transaction costs and management fees.'
On allowing employees to choose MPF providers, Ms Luk said it would cause an administrative burden to providers, as part of the employers' contribution is used to compensate for employees' gratuity and severance pay.