Terminal illness, fees and choice: inside the MPF’s 2011 consultation

On 7 October 2011, the MPFA fleshed out its planned public consultation on early MPF withdrawal: a consultation paper would be published as early as the following month, with the consultation period running at least two to three months. The authority’s stated position was to extend early access only to the terminally ill for now — but how “terminal illness” would be defined, and how much could be withdrawn, were both left to the consultation. The announcement also came with the first MPF fund fees comparison review the authority had ever commissioned.

When can members withdraw their MPF early on terminal-illness grounds?

Terminal-illness early withdrawal lets members diagnosed with a terminal condition take part of their MPF early. In 2011, MPFA chairman Anna Wu said the definition of “terminal illness” still needed public and professional consultation — and even the MPFA board was split on the proportion, with 25% and 50% both on the table.

Anna Wu personally felt members should not be allowed to withdraw everything, lest they be left without MPF protection if they recovered — but she stressed the authority had no fixed position, and everything would depend on the consultation outcome.

MPF fund fees comparison: the 2011 review

On the long-running complaint that MPF administration fees were too high, MPFA chief executive Diana Chan said the authority would hire a consultancy to study whether the charges of Hong Kong’s 19 MPF providers were excessive, benchmark them against overseas retirement schemes, and see whether streamlined processes could cut costs. A preliminary report was expected in the first quarter of 2012.

Employee choice arrangement: targeted for the second half of 2012

The Employee Choice Arrangement — the “semi-portable” MPF — was expected to take effect in the second half of 2012. The government would table the legislative amendments within 2011, and Anna Wu said she would push for swift passage of the intermediaries bill so the arrangement could launch as soon as possible and put downward pressure on fees. The MPFA had already built an electronic data-exchange platform with MPF providers, which would let it write to employees holding more than one MPF account and remind them to consolidate.

A decade of the system: HK$90.4 billion in returns

Ten years after the MPF’s launch, the system had generated HK$90.4 billion in returns as of June 2011 — more than HK$100,000 per person on average. But Anna Wu noted that the government needed a comprehensive review alongside other policies to fully secure post-retirement living standards; the MPF alone could not do it.