MPF at Ten: Beating Inflation, but Three Old Problems Remain

Ten years in, the MPF covers nearly 2.5 million employees and self-employed workers with HK$345.7 billion in assets; together with other retirement schemes, almost 90% of Hong Kong’s working population has retirement coverage — no small achievement. But behind a decade of inflation-beating returns, three old problems stand unresolved: is the protection enough, are fees too high, and is coverage truly universal?

The ten-year scorecard

Three unresolved problems

First, is the protection enough? Combined employer-employee contributions of 10% of pay plus returns can hardly fund a full retirement; most will still lean on the government safety net and family support. MPF remains a supporting act.

Second, are fees too high? The 458 funds’ average expense ratio is 1.89% (down from 2.1% in January 2008) — but set that against the 5.1% average return net of fees and the picture is clear. Annual management fees reach HK$6.5 billion; “small numbers compound” — a few dozen basis points over decades can devour a large slice of returns.

Third, is coverage universal? Casual workers, homemakers and others are outside the system entirely.

Where is the way out?

LegCo has passed a motion demanding a full review of the MPF system, and the Secretary for Financial Services and the Treasury admits there is room for improvement. Proposals on the table: studying universal retirement protection, boosting voluntary contributions, legislating fee controls, and improving transparency. Saying it is easy — workers have waited ten years and don’t want to wait another ten. Compare MPF funds’ fees and returns at MPF fund comparison.