Exclusive | China Life, BEA, YF Life among 5 picked for Mandatory Provident Fund’s electronic platform launch next summer
- All 13 MPF trustees will join the electronic platform in phases to ensure a smooth transition, pension regulator’s new boss says
- The eMPF platform will help save as much as HK$40 billion (US$5.14 billion) in administrative costs over 10 years and pass the benefits to its members
China Life, Bank of East Asia (BEA), YF Life, Bank of Communications and RBC Investor Services Trust will join between June and August next year under a preliminary schedule, according to Cheng Yan-chee, managing director of the pension regulator Mandatory Provident Fund Schemes Authority (MPFA). The schedule is yet to be finalised.
“We will schedule the 13 trustees and their 27 schemes to shift to the eMPF platform in batches in the order of the size of their assets under management,” Cheng told the Post in an exclusive interview, his first since taking office in June. “The larger the provider, the later they will join as we want to manage risks and ensure a smooth transition.”
AIA, Prudential and Bank Consortium Trust will follow in line, based on their market share. Manulife and HSBC Group, which control 54.2 per cent market share, are expected to be among the last to join, tentatively in the first half of 2025 when the platform goes into full swing, Cheng said.
HSBC Provident Fund Trustee (Hong Kong), which runs the MPF schemes of HSBC and its subsidiary Hang Seng Bank, and Manulife are the top two players in the city with a combined HK$573.6 billion of assets under management, according to MPFA data.
This is the first time the MPFA has outlined a tentative timetable for the eMPF, which will help save as much as HK$40 billion in administrative costs over 10 years and pass the benefits to the MPF’s 4.6 million members.
On average, two-thirds of the 30 million MPF transactions annually involve paper forms, according to the MPFA. After the eMPF is implemented, all MPF providers will have to use the digital platform, Cheng said.
The MPFA wants companies and individual members to use the electronic platform but they still have the option of using paper forms.
“While large organisations are prepared to go digital, some small and medium-sized enterprises and individuals may be reluctant to do so. We want to encourage them to learn about the benefits of the eMPF,” Cheng said.
“Companies and individuals will find that eMPF can make it easier to allocate contributions and consolidate or change their investment choices.”
He said the eMPF will save the administration cost for members by 30 per cent on average once their MPF provider joins the scheme. In the longer term, their cost savings could reach 50 per cent compared with the current level.
PCCW Solutions has been tasked with setting up the platform at a cost of about HK$5 billion to the taxpayers. All MPF providers will manage their administrative work for the compulsory retirement fund schemes on this platform, which is expected to be ready by the end of this year.
But Cheng said the MPF is a long-term investment and urged members not to worry too much about short-term fluctuations. “The MPF’s annual returns have averaged 3.6 per cent since its launch, handily beating the inflation rate of 1.8 per cent,” he said.
Cheng said he would like to encourage more members to opt for the Default Investment Strategy Fund, a simple investment choice covering 25 MPF schemes. The fund gradually shifts the members’ investment according to their age from equities to bonds, which are deemed less risky.