Insurers with large teams of agents look to have proven better able to fight for new pension business than banks after employees were allowed to choose their own Mandatory Provident Fund providers two months ago.
Sun Life Financial, with more than 1,200 agents, has seen its pension business grown substantially over the past two months, with around 9,200 employees shifting from other providers to join the insurer's pension plan, according to Roger Steel, Sun Life Hong Kong's chief executive.
The company has attracted one in three of the nearly 31,000 employees who have chosen to switch their providers.
Other insurers such as Manulife and AXA China Region also have seen growth in their MPF business over the past two months. Manulife did not give number but said it had "about two-thirds" of the shift. HSBC and Hang Seng, the banks who are the biggest MPF providers, said they had both seen changes in numbers of MPF members but it would be too early to comment.
Steel told the South China Morning Post: "The insurance companies, which use agents to sell to individuals, are more effective than banks."
When the scheme was set up in 2000, the bank providers were in a better position to compete for business because employers chose the providers and they tended to pick the banks they had business relationships with.
Until November, employees could not leave the providers even if they were unhappy with the service or fees. From November 1, workers were allowed to shift a portion of their contributions to any provider they liked, once a year. The MPF requires the employer and the employee to 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.
Luzia Hung, vice-president of employee benefits at Manulife (International), said Manulife had 76 years of pensions management experience in Hong Kong, and 90 per cent of its 4,000 agents had licences to sell MPF products.
The Secretary for Financial Services and the Treasury, Chan Ka-keung, said last week that the Mandatory Provident Fund Schemes Authority would look over the next three years at how to let workers shift all contributions to providers of their choice. At present, even if the employee chooses the provider for his or her contributions, the portion paid by the employer still goes to the provider chosen by the company. Steel said he agreed that employees should have complete control of the choice of MPF providers. He said overseas experience suggested about one in 10 employees would choose to change providers if they could. He believed Hong Kong would have a similar percentage.