Six-year fight over MPF’s 0.03% levy ends: collection to pause mid-2012, HK$45 saved per worker

Since 2005, trustees and the government had argued for six years over whether the overflowing MPF compensation fund should keep collecting its levy. The breakthrough came on 4 November 2011, when Financial Services Secretary K C Chan told LegCo the government planned to suspend the 0.03% levy — though legislative amendments meant the pause could start no earlier than mid-2012.

What is the MPF 0.03% levy?

The MPF compensation fund levies 0.03% on funds; with the fund “overflowing”, trustees argued collection should stop — and after six years, the government agreed to suspend it. The MPFA board had reached a preliminary consensus, estimating the pause would shave about two basis points off fund charges. Across 2 million-plus workers averaging HK$151,308 in accumulated contributions, each worker would save over HK$45.

An auto-adjust mechanism: no more six-year fights

A Financial Services Bureau spokesman added that the MPFA, referencing risk levels and overseas practice, proposed an automatic adjustment mechanism with objective triggers — collection pausing when the fund is flush, resuming when it runs low. Authorities expected trustees to cut MPF fees with the savings. LegCo’s financial affairs panel would be consulted in November, with subsidiary legislation tabled in Q2 next year.

K C Chan: ECA in the second half of next year

Chan also confirmed the Employee Choice Arrangement — employees’ annual right to choose their trustee — would launch in the second half of next year. Levy suspension plus the ECA made 2012 a turning point for MPF fees: institutional costs falling just as market competition intensified.

What members can do

HK$45 per head sounds trivial, but the principle matters: the auto-adjust mechanism enshrined “pause when overflowing”, making charges more transparent. For members, the real savings still come from comparing fund expense ratios — the 0.03% was one small line in the price war. The MPF education hub breaks down full fee structures.