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.
30,000 move to new MPF providers
Two months after they were allowed to choose their own Mandatory Provident Fund providers, about 30,000 have done so - a figure the industry says is low but which the government considers satisfactory.
The figure is about 1.3 per cent of everyone covered by the city's compulsory retirement scheme.
Workers have been able to shift from November 1 the portion of their contributions to any provider they like once a year.
Under the scheme, the employer and the employee each contribute 5 per cent of the worker's monthly salary, up to a combined HK$2,500 a month, to funds run by banks, insurers or fund houses.
The employer picks the providers, while the worker decides how to allocate the contributions to their various funds.
Until November, employees could not leave the providers even if they were unhappy with the service or fees. The change in November was aimed at creating competition to force providers to perform better.
Yesterday, Secretary for Financial Services and the Treasury Chan Ka-keung said 30,000 had people had switched providers. "This is in line with the government's expectations, as we have promotional programmes to urge the employees not to rush to change their providers; they should think carefully before making any change."
At present, employees can choose the fund providers only for their own contribution. The employer's contribution will remain at the providers chosen by the boss.
Chan said the Mandatory Provident Fund Schemes Authority will study in the next three years how to let workers shift all the contributions to providers of their choice.
"This will give employees more choice for their pension money," Chan said. The authority will also consult the market on whether to cap fees.
Stuart Harrison, chief executive of AXA China Region Insurance, said overseas experience has shown that not many workers bother to change providers.
Rex Auyeung Pak-kuen, Asia president of US pension and investment fund operator Principal Financial, said almost an equal number of people have joined and left his MPF funds.