Industry presses MPFA to name fee floor as trustees warn of pull-outs

The MPFA is pushing trustees to cut fees again without saying how low is low enough — and the industry is pushing back, with some trustees threatening to walk away.

What is the industry demanding?

The regulator won’t say what fee level is acceptable. Industry bodies including the Hong Kong Investment Funds Association, the Hong Kong Retirement Schemes Association and the Hong Kong Trustees’ Association want the authority to state what it considers a suitable fee level so the market can assess. If fees go too low, some firms may exit because there is “no meat on the bone”.

How does the MPFA respond?

The fund expense ratio has fallen from 2.1% in January 2008 to 1.81% this March. The MPFA says every trustee has cut fees in the past three years, more than half more than once or by launching low-fee MPF schemes and funds. But the authority thinks cuts are not fast or deep enough — especially with total assets more than doubling in five years — and says fees have room to fall further, with trustees duty-bound to do their utmost to protect members.

To compare fees across trustees, visit MPF fund comparison.