- FSTB
- Secretary's Blog
- Moving into a New Era of MPF - Lower Fees, Greater Convenience and New Possibilities
Secretary's Blog
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