Anna Wu: MPF fees have room to fall — independent study of admin costs commissioned

MPFA chair Anna Wu says the Fund Expense Ratio has fallen from 2.13% to 1.83% over MPF’s decade — a decline, but not a big one, showing fees have room to fall further.

Why can fees go lower?

High administrative costs are still the culprit; economies of scale and automation are the cure. Total MPF assets have reached $390 billion, Wu notes, and only scale can bring fees down — alongside automating and simplifying administration. The MPFA will appoint an independent consultant in October to study why admin costs are so high, aiming to finish by mid-next year before the government weighs next steps. The authority will keep educating members to choose low-fee funds.

Will semi-portability help cut fees?

Yes — competition will intensify once it launches at end-2012. Currently employees mostly can’t choose schemes, so competition centres on winning employers’ business; after semi-portability, workers can vote with their feet.

When can members withdraw early?

A working group has completed its review of early withdrawal, and short-, medium- and long-term recommendations go to the MPFA. The group included lawmakers, MPFA and Labour Department representatives. The MPFA also plans to relax the rules for members settling or emigrating overseas.

To compare Fund Expense Ratios, visit MPF fund comparison.