MPF management fees: top five trustees took 70% of the market, HK$4.9b a year

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

Era analysis: The original was brief, citing a Gadbury survey: in the first half of 2012, the five biggest trustees held 73.6% market share, pocketing nearly HK$4.9 billion a year in MPF management fees. Workers then hoped November’s choice arrangement would break the oligopoly — an expectation that became the starting point for more than a decade of fee reform.

Why call it an oligopoly?

Because the top two alone held nearly a third of the market. HSBC and Hang Seng led with 32.1%, far ahead of runner-up Manulife’s 17%. A financial commentator then believed that, once competition opened up, fees would plunge — just as mobile carriers had slashed prices in a price war years earlier.

Did “semi-free choice” break the oligopoly?

Expectations met a slower reality. Four trustees swam against the tide and grew assets sharply that half-year, proving smaller players could break through. But fee compression was a long grind — the average fee only fell meaningfully many years later. The HK$4.9 billion figure of 2012 became the landmark starting point for the enduring debate over whether MPF fees were too high.