The electronic platform of the Mandatory Provident Fund (eMPF) is expected to reach its fee cut target five years ahead of schedule and could save the scheme’s 4.75 million members HK$50 billion (US$6.4 billion) in less than 10 years, according to the chairwoman of the pension regulator.
The Mandatory Provident Fund Schemes Authority (MPFA) revised its estimates of cost savings from the eMPF platform on Monday during a media briefing hosted by Ayesha Macpherson Lau, who provided an update on the largest reform in the 25 years of the compulsory retirement scheme.
The eMPF, rolled out in June last year, serves as a centralised platform to replace the separate systems used by the MPF’s 12 trustees. It enables the trustees as well as the city’s 367,000 employers and 4.75 million members to manage assets worth HK$1.53 trillion through a single system accessible via smartphones, tablets and desktop computers.
A key advantage of the eMPF is cost savings from digitisation. Initially, the MPFA believed it would take 10 years after the eMPF was fully implemented to cut administration fees for the 378 investment funds from 58 basis points to between 20 and 25 basis points.
Lau said the target would now be achieved within five years, adding that the current fee level had already been cut down to 37 basis points and was expected to drop further to 30 basis points next year.
“Such a fee cut will bring in about 15 per cent extra return to MPF members compared with a level without a cut,” she said. “For every HK$100 in the MPF, the cost saving will turn it into HK$115 for the long term.”
