The new financial services minister has supported calls to reform the Mandatory Provident Fund scheme to allow employees to choose their providers in an attempt to drive down excessive management fees.
Making his first appearance at a meeting of the Legislative Council's financial affairs panel, Secretary for Financial Services and the Treasury Chan Ka-keung voiced support for reforming the pension scheme.
'The management fees of the MPF overall are pretty high. It would be good to bring in competition among providers, such as by allowing employees to change their pension providers as they like. This will add competition among providers and drive the price down, and encourage them to provide more fund choices for employees,' Professor Chan said.
Calls for to reform the scheme began two months ago when Mandatory Provident Fund Schemes Authority chairman Henry Fan Hung-ling criticised the fees, which range from 0.41 per cent to 3.87 per cent, for being too high and said allowing employees to choose the MPF providers would force the trustees to cut fees.
This was underscored by a Consumer Council report released on Monday that showed a 3 per cent fee could eat up 52 per cent of the retirement benefits over a 40-year period, assuming a 5 per cent annual return and HK$2,000 a month invested.
Legislators from the major parties called for quick action on the proposed reforms, which would require legislative changes.
