Three-way MPF price war: Principal cuts 6 funds over 10%, 700,000 members to gain

Hong Kong’s MPF price war kept raging as a third trustee joined in: Principal cut management fees on six funds by 10%–20%, alongside BCT (soon to drop the Bank Consortium Trust name) and Fidelity — with some 700,000 contributors expected to benefit across the three.

How do the three cuts compare?

Principal: six funds including the popular Series 800 cut 10%–20% from 30 December 2011 — the HKD savings fund (Class I) from up to 1.5% to 1.35% (down 10%), the capital guaranteed fund from 1.75% to 1.4% (down 20%), and global growth, international bond, long-term growth and stable return funds down 14.9%. BCT: 14 funds cut 2%–17% from 1 January 2012, benefiting 70% of members (370,000). Fidelity: all 15 funds cut 7.6%–20.6% from 12 November 2011, benefiting 300,000 clients.

Computerisation plus simplification equals fee room

BCT’s Ka Shi Lau said MPF costs kept rising, but computerisation and simpler processes left room for further cuts — and price wars would persist; she ruled out cutting headcount to fund them. Fidelity’s 陸劍平 said the cut was applied uniformly for fairness, with no distinction between new and old clients or big and small accounts.

BCT courts retirees first: preserved accounts at 0.59%

BCT became the first trustee to openly chase the silver-haired market: early retirees and over-65s who withdrew their balances could rejoin a special voluntary-contribution programme at 0.79%–0.99% preferential fees, with preserved accounts as low as 0.59%. As the population ages, retirees’ preserved accounts are the next battleground.

What members can do

Three trustees cutting at once, 700,000 beneficiaries — but “cut” does not mean “cheapest”. Check your fund’s post-cut expense ratio, then stack it against category peers; once the ECA arrives in 2012, accrued benefits can move to cheaper schemes anyway. The MPF education hub shows how to compare.