MPF fee price war continues; Bank Consortium Trust to roll out more index funds

Bank Consortium Trust managing director and CEO Ka Shi Lau says the MPF fee price war will continue — the trust’s newly launched funds already charge less, and it will offer more index funds, including expected low-risk products such as Asian bonds.

Why won’t the price war stop?

Strategies and costs differ, but cuts are the trend. On institutions lowering MPF fees, Lau said fee cuts are the broad trend; companies differ in strategy and cost, but the price war will go on. Employers, she believes, will pick value-for-money providers rather than simply the cheapest. She expects the number of available MPF funds to rise, but not the range of types — the MPFA wants risk diversification and won’t approve new fund types, such as riskier emerging-market funds.

What does Mercer propose?

Copy Australia: employers bear admin fees, employees pay only investment costs. Mercer’s Greater China outsourcing head Cheuk Wai-keung proposed Hong Kong follow Australia’s MPF fee model: management fees should be borne by employers, with employees paying only investment fees. Employers currently bear no MPF cost; the new policy would make them choose providers more carefully. The MPF is social policy, he said, and employers and employees share responsibility.

What about raising the contribution cap?

Only high earners benefit; no industry impact. Under current proposals, the MPF contribution cap rises from HK$20,000 to HK$30,000; Lau said the median Hong Kong MPF contribution exceeds HK$10,000, so the change benefits only high earners and won’t affect the industry. Discussion hasn’t reached consensus; she believes the government should offer employers tax incentives to encourage raising the cap.

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