Little room left to cut MPF fees? Sun Life sees under 0.5% over ten years

On MPF fees, 陸季嬋, Sun Life’s BestServe senior vice-president for pensions and group insurance, said in November 2011 that providers had little room left to cut: she expected the average to fall no more than 0.5% over the next decade, with passive funds already at their 0.9%–1% floor and actively managed funds holding at 1.2%–1.3%.

Why is MPF fee-cutting room limited?

陸季嬋’s call rested on cost structures: actively managed funds need research teams, so 1.2%–1.3% is near the cost floor; passive funds at 0.9%–1% are already at the limit. Her view made an intriguing contrast with the concurrent price war — Fidelity, BCT and Principal slashing up to 20% — against an insider’s estimate of under 0.05 points a year over the long run.

Performance drives choice: why MyMPFChoice.com was built

陸季嬋 said fund performance was usually members’ main consideration, yet the public had no simple platform to access information and compare funds. So the firm invested a near-seven-figure sum in “MyMPFChoice.com”, free for public use, with more data and features to come — transparency as another form of fee cut: when members can compare easily, unreasonably priced funds get voted out by the market.

Two views of fee room

What members can do

The two views are not contradictory: scale effects cut fees short term, cost floors hold them long term. For members the conclusion is singular — compare. In an era with a floor under fees but no ceiling on choice, members who compare always win. The MPF education hub teaches fee-versus-performance comparison.