Wider reform urged on MPF fee charges in Hong Kong
Regulator is told to expand the management fee cap proposed for the new core fund to all other 400 products under the retirement scheme
Lawmakers have urged the regulator of the controversial Mandatory Provident Fund to reduce fees on a wider range of funds and provide better protection for the 2.5 million employees in the scheme.
The Mandatory Provident Fund Schemes Authority proposed last week that all providers must introduce from 2016 a low-fee core of funds for employees who do not know which fund to choose for their pension contributions.
For the first time, the regulator suggested a cap on fund management fees at 0.75 per cent for that core fund, with the total fee cap set at 1 per cent.
"The proposed reform would help address the MPF's problem that providers are charging high fees. The introduction of the core fund should be the first step in the right direction," said legislator Chan Kam-lam.
"However, the MPF needs more reforms. The [authority] should not only cap the fee for the core fund, but expand the fee cap to all other 400 MPF investment funds to solve the problem that many funds are charging high fees."
The city's MPFs charge an average fee of 1.69 per cent, compared with 1.21 per cent in Australia, 0.83 per cent in the United States and 0.6 per cent in Chile.