MPF eyes lower fees as assets pass $1tn

Hong Kong pension fund's net assets passed a record HK$1 trillion at the end of July, thanks to gains in global capital markets, while regulators plan to further lower fees and charges of the Mandatory Provident Fund's schemes by improving transparency.

On average, each member of an MPF scheme had HK$217,000 in their accounts on average on December 2019, with about 60,000 accounts accumulating wealth of more than HK$1 million, said the latest report from the Mandatory Provident Fund Schemes Authority.

Total MPF net assets fell to about HK$800 billion in the first quarter, before recovering to a record high, said the chief corporate affairs officer and executive director, Cheng Yan-chee. It shows the MPF is a long-term investment. Despite experiencing fluctuation, the long-term return can cover short-term setbacks, he added.

The average accrued benefits held by scheme members rose from HK$91,000 in December 2009 to HK$217,000 in December 2019, representing cumulative growth of 140 percent.

In 2019, there were 10.1 million MPF accounts, including 4.24 million contribution accounts and 5.83 million personal accounts, the report said. These accounts were held by 4.46 million scheme members.

The total amount of mandatory contributions was HK$62.09 billion while voluntary contributions reached HK$12.94 billion by the end of December.

Contributions from tax-deductible voluntary contribution accounts grew to HK$2.17 billion by the end of July from HK$761 million at the end of last year, Cheng said. Account numbers increased to 41,200 in July from 20,000 last December.

The authority launched the MFP Fund Platform in April last year, aiming to offer more information on the management fees of MPF funds whilst further promoting market competition. More than 40 funds, involving 10 MPF products, have lowered management fees since then, Cheng said.