Changes to the law are being considered after it was revealed employees may have lost up to $7 million a month through retirement fund managers failing to place their contributions in interest-bearing accounts.
In the past two months, the Consumer Council surveyed 47 retirement schemes in Hong Kong, including 45 master trust funds for general workers and two industry schemes for part-time or casual workers. The sample size comprised 92 per cent of all fund schemes available, covering about two million workers and self-employed people.
Up to half the schemes surveyed were found to have left so-called 'funds-in-transit' in non-interest-bearing accounts. Money in this category includes funds pending investment, contributions being switched between funds or the proceeds on withdrawal of benefits.
Under the present law, trustees are not obliged to put such funds in interest-bearing accounts.
There was no immediate estimate by the council or the Mandatory Provident Fund Schemes Authority of how much potential interest had been lost as a result of the practice, the council said. But one service provider gave the South China Morning Post a rough estimate that employees could collectively be losing up to $7 million.
The US-based pension fund manager estimated that MPF funds in the first year of contribution this year would total about $10 billion. But assuming 30 to 40 per cent of funds were not paying interest for a month before they were invested, based on the current savings interest rate of 2.25 per cent, the amount lost would be $5 million to $7 million, he said.
The fund manager also queried how Hong Kong fund managers could have left members' contributions idle, unlike US trustees who would have placed such money either in banks or government bonds to yield immediate returns while waiting for investment opportunities in stock or securities markets.
