Hong Kong MPF Fees the World’s Priciest — Up to 26 Times Apart

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

The Consumer Council’s October 2012 MPF survey — its largest ever — found fund expense ratios across 109 funds ranging from 4.62% to 0.17%, a 26-fold gap; Hong Kong’s 1.74% average topped five regions. MPF fees being the world’s priciest wasn’t a slogan — it was arithmetic.

How extreme are MPF fees?

4.62% versus 0.17% — 26 times apart. One academic called Hong Kong’s MPF fees far above overseas levels; another agreed charges were on the high side.

How does Hong Kong compare?

Hong Kong 1.74%, US 0.93%, UK 0.63%. Of five regions surveyed, Hong Kong’s 1.74% was highest. The Council’s publicity chairman said such a wide spread showed ample room for cuts.

What did the Council say?

Even the “pork belly” gets carved. Chief executive Connie Lau said some trustees charged premium fees even on conservative, low-risk funds — the safe options members least expect to be expensive. She urged trustees to cut fees rather than live off high charges.

How did the MPFA respond?

Don’t compare only with overseas retirement funds. The authority said MPF should be benchmarked against unit trusts and insurance products too, and noted fees had already fallen from 2.1% in 2008 to 1.73%.

What is the lesson from 2012?

Twenty-six times is the case for reform. The Council’s 2012 report told the whole story in one number: within a single system, fees differed 26-fold. Semi-portability let members vote with their feet — funds charging absurd fees were about to meet the market.