Will the Government Become an MPF “Public Trustee”? Amy Wu Flags Two Big Worries

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

In November 2012, high MPF fees and low returns left workers doubting their retirement security. MPFA chair Amy Wu said the authority was considering legislating fee caps for trustees, adding non-profit trustees, even introducing public-sector investment products — but on the government itself becoming the MPF public trustee, she flagged two big worries.

MPF reform: when will fee caps arrive?

In 2012, still under study — no timetable. Wu said a report due the next month would advise on fee regulation and whether to cap; designing a cap had to account for administrative fees’ complexity and persistence, and whether to use percentages or dollar figures was still debated. With government-market-trustee talks of unpredictable length, legislation timing couldn’t be forecast.

Why the worries about government as trustee?

One: citizens don’t want the government managing their money. Two: the government would bear compensation risk. Wu was blunt: ordinary citizens didn’t want the government controlling their money, which is why later-stage investing was left entirely to private institutions. If MPF investments lost money, whether the government-as-trustee should make members whole was another big question. She suggested non-profit or self-financing bodies could serve as trustees instead.

What short-term moves could bring MPF fees down?

A low-fee fund category on the website by year-end, listing 21 products with management fees of 0.7%–1.235%. Wu also advised members to consolidate fund accounts to save admin fees; with “semi-portability” in place, she hoped electronic-platform settlement within a year would shorten transaction times.

When will full portability arrive?

After years of reviewing semi-portability’s results. Wu’s 2012 answer was cautious: run “semi-portability” for a few years, assess, then decide next steps. That caution, in hindsight, foreshadowed the policy tempo of the decade that followed.