Your columnist repeatedly argued for giving employees complete say over which MPF scheme they should join, and seemed to suggest that such a move will make MPF fund fees plummet. While we fully support giving employees more control over their MPF investment, it may be too simplistic to think more choices will necessarily bring a substantial fee reduction.

Logically, allowing MPF scheme members choice of funds should increase competition between funds and should, if the choice is made perfectly rationally, enhance the pricing efficiency in the industry. However, overseas experience tells us that pension scheme members do not always behave in a completely rational manner. Evidence suggests that over time, members have shown increasing apathy and inertia rather than use their powers to exert pressure through market forces.

Some behavioural economists also suggest that too many choices could be counterproductive and can mean greater confusion and complexity. When facing a wide range of options, members may not be able to make an optimal and informed decision. That’s why the MPFA introduced the default investment strategy earlier this year. It is a low-fee investment solution for those who do not know or do not have time to manage their MPF.

That is also why the MPFA is working on a centralised electronic platform to facilitate scheme members to manage all their MPF accounts on one single platform, and in so doing, strengthening the demand side of the market to make it more competitive.

As a responsible regulator, the MPFA does not shy away from making fundamental reforms. Nor does it venture into one where the costs may outweigh benefits.

Cheng Yan-chee, chief corporate affairs officer and executive director, Mandatory Provident Fund Schemes Authority