The Mandatory Provident Fund Schemes Authority (MPFA) said the fund expense ratio (FER) of MPF funds has dropped 10% over the past three years, and expects a ‘deeper and quicker’ drop in MPF fees in the future.
The authority said all trustees have reduced fees or launched new low-cost funds and schemes in the past three years, while the average MPF fund expense ratio (FER) has declined from 2.1% in January 2008 to 1.81% in March 2011, representing a reduction of more than 10% in the past three years.
In the latest issue of MPFA newsletter, Diana Chan, managing director at MPFA writes: “Although the MPFA has no statutory power to determine the fees levels or the charging structure, we have adopted different strategies to facilitate fee reduction and have been urging trustees to reduce their fees as quickly as possible.”
“We would like to see the drop to be deeper and quicker, and expect the implementation of the Employee Choice Arrangement (ECA) will facilitate further fee reduction through keener market competition, thereby benefiting all scheme members.”
Meanwhile, the authority suggests three steps that MPF members can make a better analysis when considering fund fees by saying MPF member should comparing fund fees, collecting useful information, and making better use of their preserved accounts.