MPF at Ten: LegCo Demands Full Review as Lawmakers Slam Fees Eating Contributions
2010-12-03
LegCo passed a non-binding motion urging a full review of the MPF system. Lawmakers blasted its flaws: sky-high fees devouring contributions, HK$13.7 billion offset over a decade, and a 5% contribution rate that can’t fund retirement.
Three salvos
| Criticism | Numbers |
|---|---|
| Fees too high | Intermediary management fees average 1.89%, up to 3.92%; on HK$10,000 monthly pay, HK$120,000 contributed over 10 years — guaranteed funds showed the highest headline returns but earned the least in reality. Fees are the culprit |
| HK$13.7b offset | HK$13.765 billion offset over 10 years, 4% of HK$340b+ total assets; over HK$2.5b offset yearly |
| 5% isn’t enough | Low earners can’t save enough; Lee Cheuk-yan wants government contributions for them |
HSBC cuts first, but incentives weak
Market leader HSBC launched the city’s cheapest product, potentially triggering cuts; but with semi-portability delayed, trustees have little incentive to follow. Even MPFA chair Anna Wu says fees must fall further and faster.
Chan Ka-keung’s response
The treasury chief cited HK$345.7 billion accumulated for nearly 2.5 million people, 5.1% average returns net of fees beating inflation; the system has room for improvement and stays under review. Offsetting, he said, was a labour-business compromise of its day — change needs consensus.
HK$13.7 billion offset in ten years is no small change. Workers’ retirement money shouldn’t be a severance-pay ATM. Compare MPF funds’ fees and returns at MPF fund comparison.
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