In a recent interview, chairwoman Ayesha Macpherson Lau of the Mandatory Provident Fund Schemes Authority (MPFA) said the review, to be completed next year, would be the first attempt at reforming the low-fee Default Investment Strategy (DIS) fund since its launch in 2017. The review would focus on fee levels and de-risking mechanisms, she said.
“As the Hong Kong population is ageing, many people are planning to work after reaching the normal retirement age of 65,” Lau said. “We would like to review how to further improve the DIS to meet the investment demands of the silver economy.”
Since 2017, all 12 MPF providers have been required to offer members a DIS investment fund option, which caps total fees at 0.95 per cent, making it the scheme’s only investment fund that has control over fees.
A key focus of the review will be whether the DIS fee cap needs to be lowered. Lau said additional fee cuts were possible because the digital platform eMPF can help MPF providers cut costs.
A survey by T. Rowe Price last month showed that more than half of Hong Kong residents did not plan to retire at 65. Many respondents said they could not reach a HK$5 million (US$640,657) savings target that was necessary for a comfortable post-work life.
Lau said at the end of last year, some 380,000 MPF accounts remained active after account holders reached 65 – when they can make withdrawals – suggesting many workers prefer to keep their funds invested.
