Semi-Portability Favours Workers — Sharper Competition Should Push MPF Fees Down

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

Workers had waited years for MPF fees to come down. From 1 November 2012, semi-portability gave employees a yearly chance to move their own contributions’ accrued benefits to another provider — in a HK$250 billion market, which provider dared slack? Sharper competition should lower fees: semi-portability favours workers.

Why does semi-portability favour workers?

Choice makes providers nervous. Before, workers had no choice — pricey providers and poor funds had to be endured. Choice magazine comparisons showed provider fees and manager performance varied wildly; picking a dear provider plus a weak manager could cost dearly. With switching rights, providers fearing client flight must cut fees, and weak managers must try harder.

Does a small cut matter?

Slightly lower fees compound hugely. MPF is decades-long saving: even a slight fee drop or return uptick makes a big difference to the final payout. Under compounding, 1% is never small.

How big is the market?

HK$250 billion — irresistible. Local MPF assets hit HK$250 billion, a hugely attractive market for providers and managers. Precisely because the pie is big, they’ll cut fees to win clients — workers’ bargaining power comes from the market’s size.

What is the lesson from 2012?

Competition is workers’ best friend. Semi-portability’s 2012 logic was simple: no legislation, no fines — just give workers choice and the market moves. Lower MPF charges don’t come from anyone’s kindness, but from every worker’s vote inside a HK$250 billion market.