MPFA mulls non-profit trustee charging “cost price” to force MPF fees down

To tackle high MPF fees eating into fund returns, the MPFA is studying a new move: even before the Employee Choice Arrangement launches, introduce a “non-profit” trustee charging only “cost price” to compete — pressuring fee levels further down.

Why consider this?

Fees fell just 10% in three years; legislating a cap looks politically hard. A decade into the MPF, fees have fallen only about 10% over the past three years, to 1.6% at the latest reading. MPFA executive director Hendena Yu warned trustees to cut fees or face possible legislation — but sources say a legislated fee cap would be attacked as market interference and struggle to pass LegCo. The original design expected trustee consolidation through mergers, but that never happened — one big bank’s talks to buy a smaller rival’s MPF business collapsed over price: “proof the business is lucrative.”

How would a public trustee work?

No profit motive — fees cover costs only. The MPFA is preliminarily studying a public trustee to join market competition, operating like existing trustees except with no profit target, charging only to cover costs — “showing the public how cheap fees can go” and ultimately forcing incumbents to cut further. A non-profit body could run it and offer products incumbents don’t. But the idea is still under internal discussion with no consensus and no industry consultation; whether through legislation or competition, implementation would take years.

What is new on withdrawals?

Early access for serious illness and phased payouts after retirement under study. The MPFA will submit a review report to the government in the second half, including proposals for early access to MPF savings. Currently members can withdraw before 65 only in five prescribed situations, such as permanent incapacity or permanent emigration. The authority is studying phased withdrawals after 65 instead of lump sums, and letting seriously ill members access funds early for emergencies — possibly “capped” at a percentage, with an appeal mechanism.

To learn about the MPF withdrawal age and early withdrawal rules, visit MPF fund comparison.