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Moving into a New Era of MPF - Lower Fees, Greater Convenience and New Possibilities

The brand new eMPF Platform, a major financial infrastructure funded by the Government, will be launched tomorrow (26 June).  By leveraging innovation and technology, the platform seeks to standardise, streamline and automate the administrative processes of Mandatory Provident Fund (MPF) schemes currently managed by 12 trustees and serves as a centralised administrative platform for the provision of retirement protection.  It will enhance operational efficiency, reduce costs, and provide greater convenience in managing MPF accounts, which will in turn promote the optimisation and upgrading of the industry and supply chains of pension finance as well as the transformation of the MPF industry.  In parallel, this will bring immediate and tangible benefits to the general public in terms of retirement savings protection, thus enhancing their sense of gain, happiness and security.

The first trustee to get on board the eMPF Platform is YF Life Trustees Limited.  Members and employers participating in its MPF scheme, after registering for an account on the eMPF Platform, can be the first to experience the benefits that financial technology (fintech) brings to the MPF system.  For example, employees can access their MPF accounts on mobile phones or computers anytime and anywhere to check whether their employers have made MPF contributions on time as a safeguard for their MPF rights.  The remaining MPF schemes will get on board one by one in ascending order of the size of assets under management by the trustees.  Upon full implementation of the eMPF Platform in end-2025, all MPF scheme members will be able to consolidate their multiple MPF accounts held with different trustees easily and conveniently through the platform.  This will facilitate the proactive management of their retirement savings and investment strategies.
 

For MPF scheme members, the immediate benefit of the eMPF Platform is a significant reduction in administration fees.  According to the current estimate by the Mandatory Provident Fund Schemes Authority (MPFA), MPF administration fees will reduce by around 36% in the first two years after the launch of the eMPF Platform, and will gradually drop to 20 to 25 basis points in the first ten years of its operation.  The total cumulative cost savings will be approximately $30 billion to $40 billion, equivalent to a reduction of about 41% to 55% in administration fees.  Specifically, in the first two years after switching to the eMPF Platform, the administration fee for each $100,000 of accrued benefits in an MPF account will be lowered from the current annual average of around $580 to $370, a decrease of as much as $210, which will be reflected in the member’s MPF returns.  The administration fee payable after the first two years is expected to drop further in a steady manner.  As the saying goes, “many a little makes a mickle”.  With the compounding effect and growth potential of long-term investments, the administration fees saved can effectively enhance scheme members’ retirement investment returns.
 

From the perspective of users (i.e. employers and employees), the eMPF Platform is user-friendly with a full range of functions.  By centralising all administrative processes in a single site, the eMPF Platform will substantially shorten the time for handling MPF-related matters.  For instance, the platform enables employees to not only consolidate and manage their multiple accounts anytime, anywhere, but also adjust their portfolios and withdraw their MPF under different schemes.  The eMPF Platform also serves as a one-stop platform for employers to manage employees’ MPF information and contributions, hence simplifying the administrative processes and reducing human errors.

At the macro level, the eMPF Platform will be able to draw more enterprises and capital to the industry by lowering the entry threshold for MPF service providers.  This will help promote the development of the MPF industry and make it more open to competition, boost the growth momentum of the local pension finance market, and create more business opportunities.  In addition, the eMPF Platform can solve various pain points of the MPF system by harnessing fintech solutions, and may pave the way for other MPF reform initiatives such as “full portability”, thus further strengthening the function of the MPF system in providing retirement savings protection for the general public.
 

We will endeavour to promote the eMPF Platform for our citizens to enjoy the advantages that fintech brings to the MPF system.  The eMPF Platform comes with three physical service centres located in Hong Kong Island, Kowloon and the New Territories respectively.  Apart from using the mobile application to register for an eMPF account, members of the public may also visit any of these service centres and complete registration under the guidance of dedicated staff.  I recently made a visit to the service centre in Wanchai to learn about its operation and get first-hand experience of the eMPF registration process.  It is indeed simple and convenient.  The staff are ready to explain the registration procedures in detail and answer enquiries on operational issues.  Furthermore, self-service kiosks with extended service hours in the evening and during holidays are also available across the city to facilitate citizens’ registration.

In the next 18 months following the launch of the eMPF Platform, more MPF trustees are expected to get on board in batches.  I call on all employers and scheme members to look out for publicity updates from the MPFA and information issued by the trustees of their respective MPF schemes.  I hope they will duly register for an eMPF account, just like I did, so as to enjoy a novel experience of one-stop electronic MPF management offered by the eMPF Platform.

 

25 June 2024