Budget MPF Injection Sparks Backlash; Commentators Urge Full MPF Reform

Financial Secretary John Tsang’s budget proposal to inject $6,000 into every MPF account — meant to help people invest for the future — turned into a political storm that sent approval ratings plunging. Commentators argue the deeper cause was public resentment of MPF’s injustices, and say the government should overhaul the scheme instead of funnelling public money to fund managers.

Why did the MPF injection provoke such fury?

People weren’t angry about the handout — they were angry that MPF is eating their hard-earned savings. With a bumper surplus of $93.8 billion and fiscal reserves topping $600 billion, the public expected generous relief. Instead Tsang refused tax rebates and chose to inject $6,000 into each of over 3 million MPF accounts — the single most unpopular measure. Polls showed the budget dragged the Chief Executive and all three secretaries to record-low approval, scoring just 46.9 — Tsang’s lowest across four budgets.

What are MPF’s “injustices”?

High fees devour returns, and offsetting leaves loyal workers worse off. Commentators point to hefty management fees eroding members’ accumulated returns, and the offsetting mechanism letting employers use their contributions to offset severance and long-service payments — leaving long-serving staff with little at the end. Injecting $6,000 into a scheme the public doesn’t trust only convinced people the government was enriching fund managers with taxpayers’ money.

What should the government do?

Review MPF comprehensively and treat the root cause. Tsang’s shift from insisting the budget couldn’t change to promising improvements soon shows the government can still reflect. But beyond withdrawing the injection and switching to cash handouts and tax rebates, it should examine the deeper causes of the uproar and reform MPF into a genuine safeguard for workers’ retirement.

To compare charges and returns across MPF funds, visit MPF fund comparison.