Lower charges for pension plans that need little management
Three of the top five Mandatory Provident Fund providers announced yesterday they were cutting the fees for their most conservative investment option.
The reductions, the first since the MPF was launched in 2000, will affect about 600,000 people who have opted for the providers' capital preservation funds (CPF), which offer the least risk - and the lowest returns - and require the least management.
The pension fund regulator and the Consumer Council, which in the past two months have both called for fee cuts, welcomed the decisions by AIA-JF, Manulife and Bank Consortium Trust, and hoped there would be more to come.
From Saturday AIA-JF, the third-largest pension fund provider, will reduce the fee for its CPF from 1.74 per cent to 1.25 per cent. American International Assurance Company (Trustee) chief executive Peter Crewe said the cut would save employees paying in the maximum HK$1,000 a month a total of HK$22,836 over 20 years.
Mr Crewe said: 'Our review showed customers do not mind paying the fee for stock funds or balanced funds which need active management. Customers, however, do not like the idea of paying a high fee for a simple product like the CPF, which is a money market fund invested mainly in time deposits.'
