EY fee study press conference: admin costs drive the 1.74pc, with 1.18pc possible by 2030

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

Ernst & Young, commissioned by Hong Kong’s insurance, investment funds and trustees associations, presented its MPF fee study at a May 2012 press conference. Covering the same study as companion reports, this version’s angle was the event itself: who said what.

What was said at the press conference?

What did the international comparison show?

Hong Kong MPF’s average fee of 1.74 per cent of assets exceeded Australia, Chile, Singapore and the UK — whose pension assets were far larger.

Why so high? Three reasons: one, a young system with low contribution levels, too small for economies of scale; two, huge membership numbers driving administrative costs; three, many members ignoring their accounts for years, inflating per-head costs.

Efficiency gains and scale could bring management fees down — competition had already pushed some providers to cut fees in the past year. The next test was whether semi-portability would intensify competition and how far 1.74 per cent would fall.