Latest news with #MPF
South China Morning Post
19 hours ago
- Business
- South China Morning Post
It will pay Hong Kong's workers to check their savings after MPF shake-up
Hong Kong's retirement savings scheme has had its fair share of criticism over the years. The meagre compulsory monthly contributions and relatively high administration fees charged by private service providers mean many retirees are struggling to make ends meet. Thankfully, a revamp is under way. It is welcome news that fees charged under the Mandatory Provident Fund (MPF) have fallen by 36 per cent since the launch of a centralised electronic platform last year, one of the scheme's most significant reforms since its introduction in 2000. The fee currently set at 37 basis points (0.37 per cent), which is 36 per cent lower than the average of 58 basis points (0.58 per cent) charged by trustees before switching to the e-platform, is expected to decrease gradually. The cumulative savings from lower fees are estimated to reach HK$30 billion to HK$40 billion (US$3.8 billion to US$5.1 billion) over a 10-year period, representing a decrease of 41 to 55 per cent in fees, according to the MPF authority. The massive savings speak volumes for the inadequacies of the previous arrangements. The eMPF was launched last June to provide a centralised online platform that would replace the separate systems used by 12 different operators, allowing all service providers, 367,000 employers and 4.75 million members to manage fund assets worth HK$1.338 trillion on a single platform on their mobile phones or computers. A quarter of the small and medium-tier accounts would have migrated to the platform by August. The top four players that manage 70 per cent of the MPF's assets are slated to move over between September and December – a process described as very challenging.
South China Morning Post
4 days ago
- Business
- South China Morning Post
Hong Kong lawmakers support MPF change to make accounts fully portable
Hong Kong lawmakers expressed support for allowing 'full portability' in the city's Mandatory Provident Fund (MPF) , which would allow members to move their entire pension balance to a different provider once a year. Legislative Council panel meeting discussed a legal change on Monday that would implement full portability next year. Currently, members can move their own contributions, but not those made by their employer, once a year. Chief Executive John Lee Ka-chiu unveiled the proposed change in his policy address in October. The change would 'give more choice to employees, while also adding to competition in the industry', said lawmaker Robert Lee Wai-wang, who is also the chairman of Hong Kong-based Grand Finance Group. 'The full-portability reform aims to encourage employees to proactively manage their MPF investments and promote market competition, thereby creating room for fee reductions,' said Sharon Ko Yee-wai, deputy secretary for Financial Services and the Treasury, during the council's financial affairs panel. Established in 2000, the MPF is a compulsory retirement scheme that requires employers and employees to each pay 5 per cent of the salary, up to a combined HK$3,000 (US$385) a month, into an investment account managed by one of 12 MPF providers. At the end of March, the scheme covered 4.75 million members and had total assets of HK$1.338 trillion Only employers could choose the MPF provider until 2012, when the Employee Choice Arrangement was introduced. Commonly known as 'semi-portability', this allows employees to transfer their own contributions – but not those made by their employers – to a new provider once a year. Employees conducted about 1 million transactions involving HK$50 billion under the semi-portability regime from its launch up to April of this year, Ko said.
South China Morning Post
26-05-2025
- Business
- South China Morning Post
Hong Kong's MPF managers told to prepare for US bond holdings after Moody's downgrade: MPFA
Fund managers participating in Hong Kong's US$167 billion Mandatory Provident Fund (MPF) scheme may be forced to sell part of their holdings of US government bonds after the country lost its triple-A grade from three of the biggest rating companies. The Mandatory Provident Fund Schemes Authority (MPFA), the scheme's regulator, has instructed MPF trustees and fund managers to prepare for a contingency plan if the last remaining credit agency downgrades the US government bonds. 'Recently, the MPFA reiterated this reminder to all MPF trustees, urging them to evaluate the potential implications on MPF funds in consultation with relevant investment managers in view of the latest market situation,' the MPFA said in reply to a query from the Post on Monday. It also asked the 'trustees to formulate appropriate strategies and mitigation measures in case the US does not meet the definition of 'exempt authority' due to changes in credit ratings'. The MPFA said such preparation would be needed as the authority had no plan to change the current investment requirements. It would be the responsibility of the MPF investment manager to 'formulate suitable compliance contingency plans and make timely and orderly adjustments to their asset allocation in response to possible market developments while acting in the best interests of MPF scheme members', the MPFA added.
South China Morning Post
22-05-2025
- Business
- South China Morning Post
Hongkongers deserve a financial education that empowers them
In March, the Investor and Financial Education Council launched 'Hong Kong Money Month 2025', aiming to strengthen financial resilience and combat financial fraud among the public. Despite Hong Kong's status as a global financial hub, a significant portion of its population lacks essential financial literacy . Personal finance is still largely absent from our school curriculum. We teach students algebra and essay writing but rarely show them how to read a bank statement or plan a monthly budget. While some non-governmental organisations offer workshops, they're not systematically embedded in our education system. Migrant domestic workers , who play a crucial role in Hong Kong's economy, also face financial literacy challenges. A 2024 survey by Enrich HK and the University of Hong Kong found that 62 per cent of migrant domestic workers are 'financial beginners', highlighting the need for targeted financial education programmes. I remember getting my first part-time pay cheque during secondary school in Hong Kong. Like many students working weekends at a chain store in Mong Kok or Causeway Bay, it felt empowering until I saw how little I understood about what was actually on the payslip. Mandatory Provident Fund (MPF) deductions? Tax codes? I didn't ask. I was just happy to be earning. That moment stuck with me. We often call Hong Kong a global financial centre – and it is. However, financial knowledge doesn't trickle down just because skyscrapers go up. For many working-class families, navigating credit card bills, rent hikes or MPF choices can be deeply confusing. Being surrounded by finance doesn't mean you've been taught how to handle your money.
Yahoo
20-05-2025
- Business
- Yahoo
$166B Pension Shock? Moody's Downgrade Could Force Hong Kong to Dump US Treasuries
Hong Kong's pension giants may soon hit an uncomfortable ceiling. After Moody's (NYSE:MCO) downgraded the US credit rating last week, fund managers operating under the city's $166 billion Mandatory Provident Fund (MPF) system are warning that they could be forced to trim their Treasury holdings. Under current rules, MPF funds can only invest more than 10% of assets into a single issuerlike the US governmentif that issuer still holds a AAA rating from a list of approved agencies. With only Japan's R&I maintaining that rating, the margin for error is getting thin. Warning! GuruFocus has detected 5 Warning Signs with MCO. Behind the scenes, the Hong Kong Investment Funds Association has already flagged the issue to regulators, according to sources close to the matter. Their message? Make an exception for US Treasuries before fund managers are forced to reduce exposure. As of Q4 2024, MPF bond and mixed asset funds with US debt exposure stood at HK$484 billionnearly a third of the system. The MPFA has acknowledged the risk and said it will closely monitor developments, but no formal changes have been announced. For now, global investors can mostly ignore the noise. Most aren't bound by Hong Kong's strict AAA requirement, so they're unlikely to be sellers. Still, 30-year US yields briefly rose toward 4.90% after the downgrade, before stabilizing. If R&I wavers next, that could leave MPF funds in regulatory limboand markets might not shrug it off so easily the second time around. This article first appeared on GuruFocus.
