Lam calls MPF “unpopular with employees” as offsetting debate looms: can the core fund rebuild trust?

A report from November 2017 captured the speeches at the Global Forum on Private Pensions held in Hong Kong. The then chief secretary admitted what few officials had said aloud: after 15 years, the MPF was “not welcomed by employees”. Her diagnosis pointed at two chronic ailments — high fees and the offsetting mechanism. The message: the government was determined to tackle offsetting and balance workers’ rights against employers’ burdens, while pinning hopes on next year’s core fund to push fees down and restore confidence.

On stage at the forum: what the government and the regulator said

Co-hosted by the Organisation for Economic Co-operation and Development and the International Organisation of Pension Supervisors, the forum drew more than 100 pension-industry figures from around the world. The two headline speakers struck a similar chord but with different divisions of labour:

Offsetting: the government’s “must-answer question” of its term

The chief secretary reiterated that offsetting undermined retirement protection and that the administration was determined to deal with it, seeking a policy direction and feasible measures within its term. Her operative word was “balance” — between employees’ rights and employers’ ability to pay, especially small and medium-sized enterprises. The MPFA chairman added a realist’s footnote: the government would put forward a solution, but securing consensus was “beyond anyone’s control”.

Fees: the core fund as the government’s answer

Hong Kong, she noted, runs a multi-pillar retirement protection model facing challenges of affordability and sustainability — and she expected the core fund, launching the following year, to bring MPF fees down. The MPFA chairman likewise framed the core fund as a key piece of the authority’s coming year’s work, hoping it would rebuild public confidence in the scheme.

Voluntary contributions: the third front

The MPFA chairman noted that voluntary contributions were an important part of the MPF, accounting for 23 per cent of total contributions last year, and that the government could study using the tax system to encourage more people to make them; the authority was willing to offer advice. The labour and welfare secretary echoed the idea of tax incentives for voluntary contributions.

The retirement-protection consultation: why universal pensions were rejected

On the earlier consultation on retirement protection, the chief secretary repeated the government’s central objection: with rapid population ageing, a universal pension would most likely require higher taxes, shifting the burden onto the next generation. That intergenerational tax-shift argument was the core of the case against universal retirement protection.

Myth-bust: did “determination” mean offsetting would be abolished?

In 2017, the government’s “determination” was not a decided policy. The actual state of play: officials acknowledged offsetting weakened retirement protection, and the regulator said it would follow any policy change — but the proposal, timetable and employer-compensation arrangements were all undecided. The chairman’s remark that social consensus was “beyond anyone’s control” pinpointed the reform’s biggest variable: pushback from employers, especially SMEs. Reading “determination” as “delivery” was the easiest misreading of that year.

What it meant for employees

Viewed from 2017, the report’s value was in setting the policy battleground for the years ahead: offsetting, fees and voluntary contributions advancing on three fronts at once. For employees, the real questions were simpler: how much of your MPF balance was being held hostage by the offsetting mechanism? And what were your fund fees? Whether the core fund would actually push fees down depended on its real-world charges, not the launch-day promises.

Action list

• Check your own MPF accounts: know what fees your current funds charge
• Follow the offsetting policy debate — it directly affects who owns the employer-contribution portion
• Assess whether voluntary contributions suit you: tax incentives were still under discussion at the time, not yet a settled benefit
• Watch the core fund’s launch details and compare its fees with those of your existing funds