Calls Mount to Reform MPF: Fees Too High, Money Too Hard to Touch — MPFA Plans Two-Pronged Fee Squeeze

Eleven years in, MPF covers nearly 2.5 million employees and self-employed persons with assets topping HK$300 billion — yet public anger keeps rising over high fees and money locked up until 65. The MPFA plans to attack intermediary admin fees on two fronts: forcing fee disclosure with “reasonable level” benchmarks, and studying a non-profit public intermediary.

How bad are MPF fees?

Average expense ratio 1.89%, with HK$6.5 billion a year in management fees. As of end-October 2010, the 458 MPF funds averaged a 1.89% expense ratio, down from 2.1% in January 2008 — but against a decade-average net return of 5.1% a year, the “rain or shine” fees still sting. The root cause: a not-fully-open market with weak competition; “semi-portability” comes no earlier than 2012.

At what age can you withdraw MPF? Will early access be eased?

Currently 65 at retirement; the MPFA is studying early-access relaxations. The regulator is reportedly considering letting members withdraw part of their balances early for doctor-certified serious illness, home purchase, or children’s overseas education. Critics warn early access would erode retirement protection and turn MPF into a welfare fund.

What can Hong Kong learn from Singapore?

Its CPF takes 20% in contributions and offers far freer investment choice. After keeping a required sum in Singapore’s Central Provident Fund, members can freely buy approved stocks, funds, bonds, gold, life insurance — even use it for home purchases, helping push home ownership above 90%. Hong Kong’s rigid MPF looks poor by comparison.

See what you’re paying at MPF fund comparison.