Legislators have called on the Mandatory Provident Fund Schemes Authority to act as a not- for-profit operator of simple, low- fee plans.
Legislative Council financial affairs panel chairwoman Starry Lee Wai-king proposed that a timetable be set for fund providers to lower administrative fees.
James Tien Pei-chun, of the Liberal Party, said he doubts the funds, currently run by banks and insurance firms, can be operated without profit considerations.
Authority chairman Anna Wu Hung-yuk is hopeful that Chief Executive Leung Chun-ying will revamp the scheme.
Wu cited overseas schemes as examples as proof the non-profit option is feasible.
Legislators also told the panel they want employers to stop using MPF accounts to offset redundancy and long-service payments to employees.
Wu wants to limit the amount employers can use to offset the payments. 「We want to have a choice and we will be working towards that.」
Permanent Secretary for Financial Services and the Treasury Au King-chi said the government is studying whether to cap administrative fees charged by MPF trustees and to require pension fund providers to offer simple investment portfolios with low charges.
The authority has suggested four approaches.
They are: to cap the fees of funds, order various types of low- fee funds in each scheme, provide basic default arrangements and introduce a not-for-profit operator for simple, low-fee schemes.
「Apparently a default fund would mean low or even no returns,」 Tien said.
「I doubt the public would choose that over a personal savings bank account.」
Civic Party lawmaker Ronny Tong Ka-wah asked the authority to look into ways to consolidate accounts.
「There are more than seven million MPF accounts owned by 2.5 million employees, meaning each person may have two or more unnecessary accounts,」 he said.
There are 453 retirement funds that cover 2.5 million workers.
The MPF scheme requires employers and employees to pay 5percent of individual salaries – up to HK$1,250 a month from each side – into funds.