The Mandatory Provident Fund (MPF) is a compulsory pension fund designed by the Hong Kong government as a major protection scheme for the aged and retired residents. Most employees and their employers are required to contribute monthly. A 2012 study by the Consumer Council shows that almost half of the MPF funds have posted losses in each of the past five years.
Reduce service fees on MPF products, watchdog urges
It is time for providers of involuntary pension programmes to cut down their service charges, the consumer watchdog reiterated on Wednesday.
“Given the increased use of electronic services, which has effectively lowered administrative costs, it is time service providers consider lowering the costs they charge for MPF products,” said Consumer Council chairwoman Connie Lau Yin-hing, speaking on a radio programme.
The Mandatory Provident Fund came under attention this week after Monday’s release of a council report highlighting their high charges and poor returns on investments.
The report said the management fees of some MPF are 26 times higher than others.
Lau said one idea to consider is linking administrative charges to a fund’s performance in the market.
She advised investors to avoid swapping fund providers out of a “herd instinct” after the rules are changed next month, allowing employees to choose their fund provider.