MPF fee cuts: the industry’s 2011 outlook

On 21 December 2011, remarks at the MPF Forum 2011 previewed the industry’s theme for years to come: fee cuts. AIA said management fees still had room to fall, Bank Consortium Trust said service quality mattered most, and Sun Life said no mergers within five years — a few sentences that laid bare the industry’s mindset on the eve of “semi-portability”, and any MPF fund fees comparison from that winter would have shown trustees already undercutting each other.

Why was everyone talking about MPF fee cuts in 2011?

With the Employee Choice Arrangement expected in November 2012, letting members choose their trustee once a year, trustees were cutting fees early to win clients. At the December 2011 MPF Forum, AIA said management fees still had room to fall, with low-fee products already driving healthy competition — a trend expected to continue.

Three voices at the forum

Notably, Hong Kong MPF assets then totalled about HK$337 billion (as of September 2011) with 2.33 million members. Bank Consortium Trust stressed the industry was well prepared for the arrangement to avoid chaos during transfers — though nobody yet knew how many members would actually switch.

What followed

The Employee Choice Arrangement launched on schedule on 1 November 2012, and the fee war continued for years: trustees rolled out low-fee funds and fund expense ratios drifted down. In hindsight, the forum’s most accurate prediction was not any fee figure but the phrase “healthy competition” — fee cuts never became a race to the bottom, but a long contest of products and service. See the MPF education guides for how fees are structured.