Choosing an MPF provider: don’t pick on price alone

With the Employee Choice Arrangement on the horizon and a fee war brewing, an investment consultant reminded Hongkongers in mid-September 2011 that price should never be the only criterion when choosing an MPF provider. For anyone weighing up the best MPF fund Hong Kong has available, the breadth of the fund line-up matters just as much.

What should you consider when choosing an MPF provider?

Don’t choose an MPF provider on fees alone: as of September 2011 there were 21 MPF providers in Hong Kong, and members should check whether a provider offers the funds they actually need — guaranteed funds suited to low risk tolerance, for example, are not offered by every company.

Fee cuts and the Employee Choice Arrangement

The market expected the previously shelved Employee Choice Arrangement (“MPF semi-portability”) to launch in the second half of 2012 at the earliest. Several providers had already moved first on fees, including HSBC and AIA (01299) trimming charges on selected MPF funds.

Why product range matters too

A Towers Watson Hong Kong director noted that fund line-ups vary widely between providers; picking the cheapest provider without a suitable fund only creates trouble later. He expected competition after the launch to push fees down further and expand product ranges as providers chase customers.

To compare fund choices across providers, see the MPF education hub.