Info Center

The Mandatory Provident Fund Schemes Authority (MPFA) welcomed the passage of the Mandatory Provident Fund Schemes (Amendment) Bill 2015 by the Legislative Council which provides for the introduction of a Default Investment Strategy (DIS) and requires each Mandatory Provident Fund (MPF) scheme to provide the DIS.

The DIS is a highly standardized, fee-controlled, investment strategy for MPF members that is designed to be consistent with the objective of building up long-term retirement savings. If scheme members do not make any choices for their MPF investments, their MPF contributions will be invested according to the DIS. Scheme members can also actively select the DIS if they wish.
 
An MPFA spokesperson said, “The DIS is another major milestone in the progressive development of the MPF System since its launch in 2000. It will, for the first time, address in a systemic manner, the challenges that members face when making difficult decisions about how to invest their MPF benefits. At the same time this reform helps address concerns about fee levels.”
       
The spokesperson said while the original version of the bill subjected only management fees of DIS funds to a fee cap of 0.75% of the net asset value of the funds, the passed bill also caps recurrent out-of-pocket expenses at 0.2%.
 
The spokesperson said, “With this additional provision, MPF trustees have to revise their plans on product readiness, the scheme administration system, internal controls, the IT framework, etc. and a longer lead time than originally planned is needed. The MPFA will work closely with the Government and the trustees to revise the implementation plan and will strive to launch the DIS as soon as possible.”
 
– Ends –

26 May 2016