MPF fees: assets tipped to top HK$1 trillion; fixed admin fees could cut charges

Consultancy Towers Watson projected Hong Kong MPF assets would pass the HK$1 trillion mark by 2020 — and that reforming administration fees was the key to lowering MPF charges.

What was the MPF fee level then?

MPF charges stood at about 1% to 2% of net asset value, comprising investment manager, administration, custodian and service fees — with administration fees the largest slice at roughly 50%. Philip Tso, the firm’s Hong Kong investment services director, said charges had fallen from ten years earlier and remained reasonable by retail-fund standards.

How could fees be reduced?

Move administration fees to a fixed-rate basis, adjusted only for inflation. Tso argued admin fees should no longer scale with assets — under the percentage-of-assets model, fees rose as assets compounded; only fixed fees would let economies of scale flow back to members.

The government had deferred some fee-reform discussions, but the direction was clear: as MPF assets marched toward a trillion dollars, pressure for fee reform would only grow. Workers could also compare fund fees themselves with MPF fund search.