Consumer Council’s Two Moves to Force Fee Cuts — MPF Charges Still Have Far to Fall

This article is a rewrite of a report from October 2012.

Workers doing an MPF comparison of fees and returns had reason to be furious: the Consumer Council’s report — 45% of MPF funds in the red over five years — showed trustees pocketing some HK$6.6 billion a year in fees, not just a “cushy sinecure” but “pork belly” — prime meat for the taking. To force down stubbornly high MPF charges, the Council proposed two moves.

How extreme are MPF charges?

HK$6.6 billion a year, guaranteed. On HK$384.3 billion in MPF assets and an average fund expense ratio of 1.73% across 530+ funds, trustees bank HK$6.6 billion annually. Lau called it not just a sinecure but “pork belly.”

What are the two moves?

Spell out fees in benefit statements; MPFA updates data regularly. First: trustees’ annual benefit statements should list exact fees — like brokerages itemising HK$30 dividend-collection and HK$1,000 handling charges — so members see what they pay. Second: the MPFA should regularly update key information, especially fee-versus-return comparisons; the Council admitted it lacked staff to keep doing it itself.

What level would be reasonable?

1.5%? Too early to say. Asked whether fees should fall to about 1.5%, Lau said it was hard to predict; but with MPF assets swelling and digitisation simplifying administration, room for cuts existed.

Will semi-portability help?

Yes — and members will wake up. Lau said the Employee Choice Arrangement would sharpen competition and alert over two million contributors that the choice now lay with consumers.

What is the lesson from 2012?

“Pork belly” was a consumer-rights milestone. The Council’s 2012 report and its two proposals made one thing clear: opaque fees are the breeding ground of high fees. Cutting MPF charges starts not with legislation but with letting workers see what they pay.