HSBC in No Hurry to Cut MPF Fees; Review Due in July

With MPF “semi-portability” imminent, leading trustees are slashing prices to grab clients. But HSBC Insurance (Asia) — the “number one” that led March’s cuts — says no further reduction is planned for now. Head of employee benefits Zhu Yongyao told reporters HSBC will review costs and fees again in July, not ruling out another cut before semi-portability, as the MPF fund fees comparison heats up.

How much did HSBC already cut?

Up to 40% off management fees in March, with double-digit new-inflow growth since. Zhu said March’s cuts of up to 40% brought “quite a lot of new business”, with double-digit growth in new MPF inflows over the first five months. He considers HSBC’s fees competitive now; as fund scale grows there will be room for long-term cuts, reviewed every three months.

How will semi-portability reshape the market?

A one-to-two-year switching peak, then the rankings may settle again. The industry hopes semi-portability lands mid-next year; Zhu expects the promotional wave in next year’s first half and does not rule out fresh HSBC offers. The first year or two will bring a switching peak with huge fund flows in and out, scrambling market rankings as trustees pull out all the stops — though order may return after two years. HSBC holds 32.4% market share, double its nearest rival; Zhu calls merely defending that position a major challenge, with no further growth target.

Will small trustees be squeezed out?

Consolidation may accelerate, but HSBC prefers organic growth. The top five trustees hold over 70% of the market, and many expect smaller players to struggle under price pressure. Zhu says semi-portability could catalyse consolidation and would not be surprised by small-trustee mergers or takeovers; HSBC focuses on organic growth but rules nothing out.

What about the contribution-limit changes?

A higher floor hurts short term; a higher ceiling compensates. On the planned income-limit adjustments, Zhu admitted raising the floor to HK$6,500 will shrink contributor numbers and dent HSBC’s net inflow growth from November — but raising the ceiling to HK$25,000 next June should offset the loss, a net positive, though voluntary contributions may dip. On whether this year’s returns can beat last year’s, he was “not that optimistic”, advising members not to fixate on short-term swings and to review portfolios every one to two years.

To compare charges and returns across MPF funds, visit MPF fund comparison.