Government will try to lower MPF core fund management fee, Hong Kong financial services chief promises
Chan Ka-keung says review will be held, but did not give fixed date
The government has promised to try to reduce the management fee for the core fund, a new option in the mandatory pension scheme, after lawmakers approved it but failed in their attempts to bring down the charges, according to Secretary for Financial Services and the Treasury Chan Ka-keung.
The proposal aims to help 600,000 workers who currently invest their Mandatory Provident Fund in a default option instead of choosing between funds offered by providers.
The default investment option has been criticised for charging high fees and allocating money to high-risk investments.
After the core fund has been set up, it will be the default investment option for such workers, with the management fee capped at 0.75 per cent of assets under management.
Chan said that while the setting up of the core fund was a significant first step, there was still some way to go in improving fees and investment options for the whole MPF system.
He promised there would be a review of the core fund’s management fee, though he did not say when it would be done.
“We have confidence and are determined to bring down the cap [on the management fee],” he said.
Earlier, lawmakers supported an amendment proposed by the Liberal Party’s Felix Chung Kwok-pan to cap expenses other than the management fee, such as auditing and legal costs, at 0.2 per cent.
Due to this change, Chan said, the start date of the core fund would need to be pushed back as the government would need some time to discuss with the industry how to implement the change.
While the fund was originally meant to be launched at the end of this year, the official said authorities would now aim to implement the scheme in the first half of next year.
