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In her latest blog post published today (26 June), MPFA Chairman Mrs Ayesha Macpherson Lau said that since the inception of the MPF System in 2000, the MPFA has been working with the Government to make continuous enhancements to the MPF System, resulting in 21 sets of legislative amendments in the past 21 years to provide better retirement protection for scheme members.

On the adequacy of MPF, Mrs Lau pointed out that a number of factors were closely related to this important issue, including contribution amount, investment return, fee level and investment period.

Mrs Lau said, “The MPFA has all along been encouraging employers and scheme members to make additional voluntary contributions to enhance employees’ retirement reserves. I am very pleased to see that more and more employers and scheme members are willing to do so.” According to MPFA data, the amount of voluntary contributions recorded continual growth from $2.3 billion in 2004 to $15 billion in 2021, representing an increase by about 550%. As of March this year, the total amount of Tax-deductible Voluntary Contributions (TVC) received since April 2019 was over $6.4 billion, and there were about 62,000 TVC accounts.

With regard to investment returns, about 30% of total MPF assets were investment returns, net of fees and charges. The annualized net return rate was 3.6% as at the end of March 2022 since the inception of MPF System in 2000, outperforming the annualized inflation rate of 1.8% over the same period and adding value to the retirement reserves of the working population.

Concerning fee level, with efforts made by the MPFA and the industry over the years, the average fund expense ratio of MPF funds dropped more than a third, from 2.1% in 2007 to 1.39% as at the end of May 2022.  The eMPF Platform, which is currently under construction, will further reduce administration costs significantly. In the first two years after the implementation of the eMPF Platform, an average reduction of about 30% in the scheme administration fee payable by scheme members is expected.

Mrs Lau also said, “The ‘offsetting arrangement’ has inevitably led to the leakage of MPF assets over the years and weakened the retirement protection of the MPF System. Upon the abolition of ‘offsetting arrangement’, scheme members will have more assets for accumulation and growth, and the retirement protection outcome will be further enhanced under the compounding effect. I am confident that under the formidable combination of the eMPF Platform and the abolition of the ‘offsetting arrangement’, together with other enhancement measures, the MPF System would provide a greater contribution to the retirement protection of the working population.”

For the full version of the article, please visit the MPFA blog. The blog is in Chinese only.

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26 June 2022