The MPFA says that it has a hotline, website, leaflets, newsletters, publications, offices and an inquiry counter at the Labour Tribunal, which all offer MPF information.

Yet Rogers' comments are ironic in that Hong Kong's retirement savings plan is supposed to be all about choice. No fewer than 422 funds are on offer in the staunchly free-market pension system.

But complaints about the system are common, mostly about the perceived high fees of the fund providers and perceived low returns. The Consumer Council scolded the MPF industry in 2007 for overcharging on commissions, when it found that fees ate up about half of typical returns generated by the scheme.

'The complaint about exorbitant fees has been there from the start, which is why people see it as yet another way for the government to create a scheme for business to make money at their expense,' Christine Loh Kung-wai says. Loh, head of the public policy think tank Civic Exchange, was a Legislative Council member when the state created the MPF in 2000.

The fund covers those workers who had never had any kind of pension plan. Every month, workers and employers each contribute 5 per cent of the worker's salary - or up to HK$1,000 each. Any employee contribution above that is voluntary and, given there is no tax incentive to contribute, many people don't.

The employer chooses the provider, which can be a bank, insurance company or fund manager. The employee then decides how to allocate his or her contribution, depending on the appetite for risk. At the official retirement age of 65, a worker withdraws a lump sum, including any investment gains.

Workers with alternative employer-provided pension plans are not subject to the MPF.

A common complaint about the fund is that it's an ineffective plan for retirement, given that individual contributions commonly max out at HK$2,000 per month.

According to Kerry Ching, Fidelity Investment Management's head for Hong Kong, the average account's MPF balance on March 31 was about US$20,000 - a sum that does little to address an individual's retirement needs.

An HSBC survey conducted in March and April last year states that only 3 per cent of respondents believe their MPF savings will last more than 15 years after retirement, and almost 87 per cent do not make any MPF voluntary contributions. The study surveyed 1,000 MPF users.

More than 30 per cent of Hongkongers involved in the MPF do not read their annual benefits statement, estimates Belinda Luk, senior vice-president of pensions and group business for Sun Life Hong Kong, adding: 'It's a reflection of people's lack of interest.'

The MPF does have its supporters, particularly within the industry. They note that the programme's fees are, on average, lower than those found on a comparable mutual fund sold to the public.

'On an MPF fund, we usually charge a fee of less than 1 per cent ... on a retail market fund it's 1 per cent or above,' says Kelvin Lee, head of institutional business for Schroders. The fund management firm sells many funds into MPF schemes.

There is a lot of excellent information on MPF fees to be found on the MPFA website. (See Smart Money, page 2.)

Supporters say that the funds in the programme have returned an average of 5.5 per cent per year in the 10 years it has been in operation, which is a respectable yield.

'The Exchange Fund only returned 4.9 per cent. But anyone who compared the two will still say MPF fees are too high and the performance is too low,' says Bonnie Tse, senior vice-president of AIA Pension and Trustee Co. The Exchange Fund is managed by the Hong Kong government, and it contains most of the territory's fiscal reserves.

But changes are afoot. Those involved in the MPF industry (the fund managers, trustees and sponsors) are also lobbying the government to raise the minimum mandatory contributions for the MPF. Their agenda, of course, is to get more money to manage, but it also makes sense to those who complain the MPF is ineffective at creating a retirement nest egg.

From next July, people are likely to be allowed to choose their own funds under a plan called employee choice arrangement (ECA). This will end an unpopular arrangement by which employers choose their employees' fund scheme. ECA is a promising reform in that it will empower users, enabling them to shop around and bring more competitive pressure to bear on the industry.

'The idea of ECA is to increase the freedom to members, and to increase competition. Fees will come down, and services will go up,' says Schroders' Lee.

Other initiatives are on the boil, such as a proposal to simplify and codify the language of the programme such that, for example, there is a set definition of the percentage of equity assets found in a balanced fund.

'Different managers can call a fund a balanced fund, but it may have different allocations. It may be 50-50 or 70-30 [debt and equity split],' says Elvin Yu, head of Hong Kong and China business for RCM Asia Pacific, a fund manager that is part of Allianz Global Investors, based in Munich, Germany.

When it was launched in December 2000, the MPF was designed as a privately managed, fully funded contribution scheme, says Fidelity's Ching. She adds the MPF was implemented at a time when only one-third of the working population had retirement protection.

The government wanted to ease people into the programme 'to start with something that is acceptable to the general public', says Ching.

Loh, speaking today from her perspective as a former Legco member who saw the MPF formed through negotiation by opposing parties, sees the programme as a policy compromise.

'[Former governor] Chris Patten first proposed an old-age pension, but the idea was shot down by employers' representatives as socialism and by unionists as not good enough. They wanted a Singapore-style scheme,' says Loh. 'When the government decided to back off the idea for lack of support, pressure then built up for a compromise, which eventually became the MPF.'

Hong Kong's MPF is held in an often invidious contrast to Singapore's pension scheme, the Central Provident Fund. The CPF is likewise member-funded. The Singaporean government is involved in the administration of the fund, which insulates it from complaints about excessive industry fees. The assumption is that the state brings enough scrutiny to the plan and has the clout to ensure all fees are fair.

Then, as now, Loh sees the MPF as a compromise because it lacks key elements of a social safety net, such as income redistribution and comprehensive coverage. It was conceived, and remains, a mandatory personal savings plan with modest financial targets and no demands on the public purse.

It is the mandatory aspect that rankles MPF contributors such as Rogers. As it stands, employees have no alternative other than to give their money to the plan, and do not yet have a right to choose their MPF providers.

Meanwhile, for a free-market solution, the MPF has cartel-like aspects. Five service providers control about 70 per cent of the industry, and fees were unacceptably high until the 2007 Consumer Council intervention (average charges subsequently fell by about half).

There is also no centralised source of information about fund performance, a surprising omission given that this a key criterion on which individuals choose funds.

'If you join one particular MPF scheme ... the fund fact sheet that you receive only tells you about the fund performance of all funds in that MPF scheme,' says Sun Life's Luk. 'Members generally cannot have any easy access to the fund performance of other MPF schemes. The market doesn't provide adequate access [to information], other than the fee comparison table published by the regulator.'

The MPF's shortcomings on the basic elements of a free market (choice, competition, information) irks many Hongkongers.

'The MPF is well governed. But it is not enjoying the reputation it deserves,' says Luk. 'The industry should join hands to correct that impression.'

Meanwhile, the more challenging aspects of a free-market scheme are fully evident, including a sprawling patchwork of fund providers, a reliance on users to monitor their own fund providers, no regulation on fees and a pension system that fails to deliver comprehensive, universal retirement coverage.

Even the most ardent MPF supporters acknowledge that the plan is a work in progress.

'The MPF is very young. Both the government and the private sector are on a learning curve,' says Lee, of Schroders. 'But ... the MPF is growing and it is starting to have more relevance to individuals' retirement plans.'

Sun Life's Luk adds: 'As their MPF assets grow with time, members are beginning to pay more attention. The total MPF asset size is close to HK$390 billion. The average balance is at the six-digit level.

'If a person keeps on investing HK$2,000 per month for a long period of time ... the cumulative value at a 5 per cent average yearly return after 40 years could be HK$3 million. It's not insubstantial.'

$20,000

The 'nest egg', in US dollars, of the average Hongkonger's MPF account on March 31, according to Kerry Ching of Fidelity Investment Management

A better ratio

What is fund expense ratio? It calculates all expenses of a fund divided by the total value of the fund. The measure accounts for all the costs of a fund, and not just a single, highly visible charge, such as the fund management fee.

It is the best measure of the fees charged against a fund, and it is the main ratio used by the Mandatory Provident Fund Schemes Authority to compare funds on this crucial criterion.