Manulife has about 200 dedicated MPF staff. The company handles all its MPF business in-house, including administration and investment.

The decision to handle its own administration for MPF was a natural one, Mr Crouch says. Administration systems were already in place to handle Orso business, and so setting up MPF administrative systems was no great challenge.

'Our issue was whether we could get a significant enough share of the market to have a viable block to administer and we were able to do that,' he says.

For the moment, all Manulife's MPF investment options are based on in-house investment funds.

'We did not have any strong view on not looking outside,' Mr Crouch says. 'It was simply that we didn't think initially that it would be an issue.'

'Our North American operation puts all of its retirement money out to external fund managers, and so we will in time change that. When we believe people want a broader choice of funds, we will provide it.'

Mr Crouch believes the MPF will evolve from its present state, where it is largely made up of groups of individual accounts held under the employer's umbrella, to many thousands of preserved accounts, packets of funds remaining when people left their employers but preserved in their names until retirement.

Recent staff lay-offs in Hong Kong have had an impact on the profile of the MPF system. Someone losing or changing jobs has the choice of leaving accrued MPF money with the existing provider, moving it to the new employer's provider or handing it to another provider. The result can be a preserved account in the member's name remaining in the original employer's MPF scheme. No contributions will be made by the former employer, but the account will continue to be managed by the original provider.

Mr Crouch says most retrenched or resigning employees opt to leave their MPF money with the existing providers.

'There is not a lot of movement. When a new member enrols with a new company, some are bringing their MPF business with them but the percentage, I would say, is less than a quarter. It is tending to become lots of individual pots of money in the name of each member,' he says.

'Down the track people will become a lot more aware of their MPF accounts and of course the amounts of money will become bigger. Right now, we are only talking about one or two years of contributions. Our average preserved account is of the order of HK$10,000 but we have some in the hundreds of thousands. Over time, that will become the big block of the business - preserved accounts as opposed to the money under the employers' scheme.'

Job turnover in Hong Kong has fallen along with the economy and associated lay-offs, but it has typically been higher than 20 per cent a year. Mr Crouch believes this will help boost preserved accounts as a proportion of total MPF assets within the next few years.

As with other MPF industry players, Manulife sees some consolidation coming to the crowded market, but Mr Crouch believes it will take the form of out-sourcing some in-house functions rather than complete sales of operations.

'A lot of providers, particularly the smaller ones, got into the MPF as much as a defensive move as an aggressive move. They are still around and they will want to maintain their names on schemes. But some might conclude that they have not got a big enough block of business to enable them to run their back-office administration efficiently. They might decide to out source that to someone who can do it more cheaply. My inclination is that is the way the market will move.'