Portable MPF assets set to reach 67% once ECA launched

九月 30, 2011
Joe Chan

Portable MPF assets is likely to surge once the Employee Choice Arrangement (ECA) comes into force in the second half (H2) of next year, according to KC Chan, Secretary for Financial Services & the Treasury.

The assets may jump from the current level of 39% to 67%, he said on a pension forum Tuesday.

The ECA, which allows employees to transfer accrued benefits derived from their contribution from one MPF provider to another at least once a year, is expected to be implemented in H2 2012 after enhancing the regulation of MPF intermediaries’ activities, he said.

Chan also said a bill is being prepared to enhance the regulation, and they plan to introduce it in Q4 this year.

Meanwhile, there were 19 approved MPF trustees and 41 schemes at the end of the first half of 2011 whereas the total contributions into the system after deducting the amount of benefits paid were at a net total of HK$277.52bn, he added. For asset allocation, 66% were in equities, 22% were in debt securities and 12% were in deposits and cash.

In addition, Chan expects the ECA could lead to fees reduction despite the average fund expense ratio (FER) has been reduced from 2.1% in January 2008 to 1.82% in August this year.

"We believe there is still room for further reduction given the increase in the scale of MPF assets," he added.

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