MPF fund fees comparison: why a price war was brewing in 2012

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

With more than two million employees set to choose their own MPF trustee from November 2012, trustees were bracing for a price war. The chairwoman of the Hong Kong Trustees’ Association said in January 2012 that MPF fees still had room to fall — but warned against reckless undercutting.

How should members choose an MPF trustee?

Members choosing an MPF trustee should compare more than just fees. The association’s advice in 2012: look at ten-year fund annual-report performance, the breadth of the fund range and platform, and the trustee’s investment character and track record — then pick the intermediary that fits your needs.

Why did ‘semi-portability’ take a year to launch?

Labour groups complained the wait was too long. The association explained that the MPFA first had to finalise the intermediary regulatory regime and sales conduct code, coordinate with the industry, and run repeated tests with trustees on the electronic platform — pushing the launch to the fourth quarter of 2012. The Executive Council had already endorsed the Mandatory Provident Fund Schemes (Amendment) (No. 2) Bill 2011 to tighten supervision of intermediaries’ sales conduct.

The members who never look

Nearly one in ten Hong Kong employees rarely checked their MPF accounts in 2012, letting assets drift with the market. Semi-portability handed them a choice — but only the engaged would use it. For background on how the system works, see MPF education resources.