MPF Administrative Fees and Returns

Hon KP Chan on the Regulation of MPF Intermediaries

1.    Recently, many MPF providers have launched funds with Administration fees lower than 1%, when would that be reflected in the overall average administration fees published by the MPFA?

2.    If the MPF compliance rules and administration procedures can be further automated or simplified, there will be more room for lowering the MPF administration fee. Is there any discussion with the industry in that direction to lower the MPF operating costs? the proposed MPF intermediaries regulation and electronic platform will involve new expenses, would it increase the operating expenses of the providers?

3.    Although the level of the administration fee is important to MPF members, ultimately, it is the investment return after deduction of administration that really matters. Unfortunately, many members claimed that they did not know how to invest and decided to select low risk funds. In such cases, no matter how low is the administration fee, the return is going to be low. What can MPF Authority do to improve the situation?

4.    What is the latest estimation for the launch date of the Employee Choice Arrangement?

The response from the MPFA is quite general but I just want to put on record that the complicated administration procedures and procedures are important parts of the administration costs and hence affected the administration fees. The MPF members also need to take more risks if they want a better return. Lowering the Administration fees alone will not achieve a high return.  The Government also estimated that the ECA will be launched around July 2012.

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