MPF fee cuts: no price war coming, but room to fall, said AIA

This article is a rewrite of a report from August 2012.

Era analysis: The original carried only a few quoted lines: an AIA MPF executive said “semi-free choice” wouldn’t trigger a price war, though fees still had room to fall. On the eve of the November 2012 Employee Choice Arrangement, “will they cut fees” was the city’s big question — and “no price war” captured the industry’s mindset.

Why no price war?

The industry broadly believed fiercer competition would improve product design but not descend into throat-cutting. The logic was practical: MPF was still developing, and only growing scale could dilute costs; meanwhile the new regime’s compliance and admin costs kept rising.

What did “room to fall” mean?

The executive added that as business scaled up, overall MPF fees still had downside — i.e. MPF fee cuts would come not from an overnight price war but from slow-burning scale effects. In hindsight the call was broadly right: average fees drifted down year by year rather than collapsing at once.

For workers, the point wasn’t waiting for cuts but learning to compare: like-for-like funds on the MPFA’s fee comparison platform — that was the real weapon “semi-free choice” handed them.