HSBC launches MPF Choice plan with fees from 0.79%; existing customers left out

Hong Kong’s biggest MPF provider, HSBC, has announced a new “Choice” scheme launching next quarter with nine new funds charging management fees of just 0.79% to 0.99% — nearly half the price of its existing products. But HSBC has not promised the same cuts to its 700,000-plus existing MPF customers, leaving open how many workers will actually benefit.

What is in the new plan?

Nine funds at 0.79%–0.99%, with the Hang Seng Index fund at half price. HSBC calls it one of the cheapest plans on the market: the Hang Seng Index fund and Hong Kong’s first H-share index fund both charge 0.9% a year, while three US, European and Asia-Pacific equity funds charge 0.99%. That compares with an average 1.8% on HSBC’s existing MPF products — and its old Hang Seng Index fund charges 1.65%, so the same index exposure now costs almost half under the new plan.

Why might existing customers keep paying more?

Old products are not being cut; employers decide. HSBC insurance chief Mark Pickering denied the move was a response to MPFA or political pressure, saying it answered customer needs. But the old products are not getting cheaper: if an employer does not switch to the new funds, existing members keep paying the higher fees — an unfair “one product, two prices” situation. Pickering said HSBC is aware of the issue and will review whether to cut fees on some old MPF products.

How does this MPF fund fees comparison stack up?

HSBC’s 0.79% undercuts most rivals — run an MPF fund fees comparison before you switch. The new plan’s 0.79%–0.99% range sits well below the market average.

Are the other giants joining the price war?

AIA and Manulife are holding back for now. HSBC expects other trustees to cut fees eventually, but AIA and Manulife — the second- and third-largest providers — have not announced any reductions. Legislator Wong Kwok-kin, who also sits on the MPFA board, will move a Legislative Council debate today calling for a full review of the MPF system with nine recommendations, including lower MPF management fees, tripartite contributions from government, employers and employees, and full portability under the Employee Choice Arrangement.

For an MPF fund fees comparison across providers, visit MPF fund comparison.