Hong Kong will get simpler, cheaper pension scheme with eMPF

I refer to Antony Wood’s letter (“Muddled MPF system does not help bosses or employees”, August 28).

We know the public yearn for a simpler, cheaper and more cost-efficient Mandatory Provident Fund (MPF) system. The eMPF project, which we are now working on, will deliver just that.

It involves standardisation, streamlining and automation of MPF scheme administration. It envisages centralising MPF scheme administration on an electronic platform, providing better user experience and greater scheme administration efficiency, thereby paving the way for further fee reductions.

Under our eMPF blueprint, scheme members can use a single login to access the centralised platform, on which members can view and manage all their MPF accounts invested in different MPF schemes and funds.

Mr Wood asked for giving each employee “a single fund that they would carry throughout their membership of the MPF”.

We believe not many scheme members would like to invest in only one fund throughout their working life. Rather, they would like to have the simplicity of managing their MPF investment on a single platform.

We would also like to stress that the choice of the investment manager does not rest with the employer, as Mr Wood said. Under the MPF system, employers are responsible for choosing MPF schemes for their employees, but staff are free to choose the different funds offered in the chosen schemes and decide on their own investment portfolio. All MPF schemes offer a range of funds with different investment objectives to choose from.

In addition, the Employee Choice Arrangement (ECA) allows workers to transfer the MPF benefits arising from their own contributions in their current employment to a scheme of their choice once a year. Scheme members can also transfer all the MPF benefits of their previous jobs anytime to any scheme and any fund. Currently, about 70 per cent of the MPF assets, or over US$500 billion as of June this year, is freely transferable.

Over the years, we have taken a number of steps to facilitate fee reductions – requiring greater disclosure of fees, launching the ECA, encouraging scheme and fund consolidation, and so forth. The average fund expense ratio of MPF funds has fallen by about a quarter in 10 years, to 1.56 per cent in July.

When implemented, eMPF will bring efficiency gains to the MPF industry and we trust that all parties, employees and employers alike, will benefit from it.

Cheng Yan-chee, chief corporate affairs officer and executive director, Mandatory Provident Fund Schemes Authority

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