Anna Wu: MPFA hires independent consultant to dissect admin costs — legislated fee caps the last resort

Ten years on, MPF’s high fees keep eating retirement returns and drawing fire. The MPFA’s new ploy to force cuts: hire an independent consultant to dissect trustees’ administrative costs and simplify processes. Chair Anna Wu says that beyond relaxing withdrawals, three major initiatives are under study — including a central database.

What will the consultant study?

Trustees’ admin cost structures — where the fat is. The MPFA advertises on 21 July for consultants to examine trustees’ admin fee arrangements, appointing in October and reporting by mid-next year. Markets doubt a report can force price cuts, but Hong Kong Trustees Association vice-chairman Thomas Liu calls third-party scrutiny healthy — showing how ever-tighter regulation has driven providers’ costs up, leaving little room for deep cuts, beats being made the scapegoat.

What is the central database?

Built for eventual full portability — tracking accounts and contributions across the system. Full portability means workers freely choosing trustees for both employer and employee contributions — true autonomy. Wu reassures that neither industry nor members will bear extra costs for now. But lawmaker Lee Cheuk-yan warns the offsetting problem must ultimately be solved — lest workers who pick wrongly lose another chunk to severance offsets when dismissed.

What if fees still won’t fall?

Legislated fee caps are the last resort. Total MPF assets exceed $390 billion at an average 1.83% fee, Wu notes; she won’t name a target, only “the lower the better”. The authority is also weighing legislation forcing all trustees to disclose expenses and income — transparency as a price weapon.

To compare fund fees ahead of switching, visit MPF fund comparison.