Will the Employee Choice Arrangement Stall? More Choice May Not Mean Lower Fees

As MPF turned ten, the MPFA announced members could pick investment funds across the whole market — the Employee Choice Arrangement — then promptly deferred it. Industry voices pour cold water: wider choice may not cut fees, and could even encourage fund-manager consolidation that eases pressure to reduce charges.

Why doesn’t more choice mean lower fees?

Because wider choice may accelerate consolidation, dulling the incentive to cut. In theory, choice intensifies competition and squeezes fees — but many in the industry believe the arrangement will encourage fund-manager mergers, easing market pressure to lower management fees, which are the bulk of MPF costs.

What did the government do next?

It pivoted from legislation to moral suasion — with limited effect. Facing disappointment, the MPFA and government departments urged big insurers, banks and trustees to cut fees for the public good or face shaming. Media pressure coaxed token cuts from key providers — small, not for all members — and the episode cost the MPF brand credibility.

Why did the HK$6,000 injection become a cash handout?

Because injecting it into MPF drew a bigger backlash. The Budget had promised HK$6,000 into every MPF member’s account (HK$24 billion total), even asking trustees to consider waiving fees on the money. Debate quickly spread from fees to the scheme’s limits — MPF covers only the employed, not all retirees. The government withdrew the injection in favour of tax rebates plus HK$6,000 cash for all residents.

When choice will actually arrive remains unknown; members can compare what’s out there at MPF fund comparison.