MPF core fund reform to bring fees down
Panel members at debate urge employees to be more involved
The controversial MPF core fund reform to be voted on by lawmakers this month, which will introduce a fee cap, will hopefully alleviate criticism that the pension scheme has high fees and low investment returns, Darren McShane, executive director of the Mandatory Provident Fund Schemes Authority, said on Wednesday.
Speaking as a panel member in a Redefining Hong Kong debate hosted by the South China Morning Post, McShane said they would be voting on the biggest reform since the Mandatory Provident Fund scheme was introduced in 2000.
If lawmakers passed the proposed change to the law, all MPF providers would need to introduce a core fund which would have a fee capped at 0.75 per cent as the default investment arrangement for all the 600,0 00 employees who did not choose how to invest their MPF.
The introduction of the core fund reform is likely to help bring the fee down
At present, Hong Kong does not have a standard default arrangement and the fund providers decide how to invest, which may see funds subject to high management fees or put into investments that are too risky.
“The introduction of the core fund reform is likely to help bring the fee down,” McShane said in the panel discussion.
However, he and other panel members said the core fund reform alone could not solve all the problems of MPF, which has been criticised for high fees, low returns and insufficient retirement savings protection.
“Since the MPF is a compulsory retirement scheme, people feel negative about the scheme because they are forced to do it,” McShane said.
Another panel member, EY partner Jeroen Buwalda, said more government incentives and employee involvement was needed to improve the pension scheme.