Editorial | It will pay Hong Kong’s workers to check their savings after MPF shake-up

Hong Kong’s retirement savings scheme has had its fair share of criticism over the years. The meagre compulsory monthly contributions and relatively high administration fees charged by private service providers mean many retirees are struggling to make ends meet. Thankfully, a revamp is under way.

It is welcome news that fees charged under the Mandatory Provident Fund (MPF) have fallen by 36 per cent since the launch of a centralised electronic platform last year, one of the scheme’s most significant reforms since its introduction in 2000.

The fee currently set at 37 basis points (0.37 per cent), which is 36 per cent lower than the average of 58 basis points (0.58 per cent) charged by trustees before switching to the e-platform, is expected to decrease gradually.

The cumulative savings from lower fees are estimated to reach HK$30 billion to HK$40 billion (US$3.8 billion to US$5.1 billion) over a 10-year period, representing a decrease of 41 to 55 per cent in fees, according to the MPF authority. The massive savings speak volumes for the inadequacies of the previous arrangements.

The eMPF was launched last June to provide a centralised online platform that would replace the separate systems used by 12 different operators, allowing all service providers, 367,000 employers and 4.75 million members to manage fund assets worth HK$1.338 trillion on a single platform on their mobile phones or computers.

A quarter of the small and medium-tier accounts would have migrated to the platform by August. The top four players that manage 70 per cent of the MPF’s assets are slated to move over between September and December – a process described as very challenging.