MPF changes first step on road to reforms
'Semi-free walk' which begins tomorrow is the first stage of more proposed reforms aimed at aiding the worker, says the MPFA's Diana Chan
From tomorrow, the city's 2.4 million workers will be free to choose their own Mandatory Provident Fund provider, giving them a much-needed say where their nest egg is invested.
But complaints over the fees charged by providers, who were previously chosen by employers, are expected to continue, and may be the harbinger of further changes to the 12-year-old pension scheme.
At the end of next month the Mandatory Provident Fund Schemes Authority would announce a range of reform proposals to reduce fees, Diana Chan Tong Chee-ching, managing director of the MPFA told the South China Morning Post recently. Possible options include adding a cap on fees as well as a mandatory requirement that all schemes have at least one low-fee investment choice.
The Consumer Council earlier this month released a survey indicating MPF investment funds had average fees of 1.73 per cent, higher than overseas markets which charged as low as 0.5 per cent of the asset under management. The Hong Kong fees have fallen from 2.1 per cent in 2008.
"The MPFA is not happy with the speed and level of fee reduction. MPF assets have reached almost HK$400 billion and the providers should have room to reduce fees further," Chan said. "Capping the fees would definitely be one of the measures we would consider."