MPFA Studies “Tough Measures” to Force Fee Cuts, Including Legislation and a Public Trustee

With MPF fees long criticised as too high, the MPFA revealed in July 2011 that it was studying “tough measures” to force trustees to cut fees — including legislating fee caps and even setting up a public trustee.

Why the tough talk?

Because trustees have cut fees too slowly over ten years. MPFA chairwoman Anna Wu had already blasted providers in November 2010 for a decade of sluggish fee reductions. Though some trustees have launched low-fee plans recently, overall fee levels are still seen as high, eating into members’ returns.

What measures are on the table?

Fee caps by law, a public trustee, or sharper competition. Options under study include legislating fee levels, setting up a non-profit or public trustee offering low-fee choices, and using the Employee Choice Arrangement to intensify competition so trustees cut fees on their own.

How does the industry react?

It fears market distortion. Trustees generally argue legislated fees would distort the market and prefer competition-driven cuts; labour groups back government intervention, saying the wait has been long enough. Compare MPF funds’ fee levels at MPF fund comparison.