After Ten Years of MPF, Why All Show, No Dough?

After Ten Years of MPF, Why “All Show, No Dough”?

In February 2011 a commentary quipped that ten years of MPF left retirees with “an orange at old age” — high admin fees, few fund choices, and pots of just tens of thousands that ran out within years. Some retirees drew only tens of thousands at 65, then fell back on welfare.

Is compounding really “money making money”?

The piece did the maths: on an HK$8,000 salary contributing HK$800 a month, 25 years would yield about HK$483,000 — but HK$174,000 of it went on fees; after inflation the purchasing power equalled only about HK$30,000 today. Compounding cuts both ways: as returns snowball, so do inflation and charges.

Why were fees the biggest grievance?

MPF averaged about 5.1% a year, but management and admin fees ran near 1.89%, eating close to half of contributions. Paying regardless of performance was the system’s most attacked feature.

How to lose less to fees?

Compare funds’ expense ratios and pick low-fee options — it compounds over decades. Compare MPF funds here.