Hong Kong’s Mandatory Provident Fund will have lower administration fees once the retirement scheme is moved onto an electronic platform by 2025, according to Eric Lui, project director of the eMPF platform provisional office at the Mandatory Provident Fund Schemes Authority (MPFA).
He noted that the MPF industry is fragmented, with 405 funds, 13 trustees and 12 scheme administration platforms. Around two-thirds of transactions are still paper-based.
“Every year, 65% of the overall 30 million MPF transactions are paper-based…Only 46% of employers are digital users,” he said at a financial technology forum in Hong Kong on November 2.
According to Lui, the electronic MPF can “provide tangible benefits to stakeholders and the MPF industry”.
He said the eMPF will streamline administrative tasks and lower administration fees, which account for around 47% of MPF costs. It will also reduce paperwork for employers, provide employees with a one-stop platform, as well improve reliability and accuracy of the MPF system, he added.
The MPFA, which supervises the MPF industry, is scheduled to migrate data from trustees onto the eMPF between 2023 and 2024. The electronic platform is expected to become fully functional in 2025.
It’s not clear whether the number of administrative platforms will be reduced from the current 12. These platforms are managed by MPF trustees, their subsidiaries, and third-party administrators.
Lui acknowledged that the eMPF will face many challenges, including members’ reluctance to manage their accounts electronically. Some members are also not tech savvy, which may be a barrier to promoting the platform.
Launched in 2000, the MPF scheme managed HK$1.22 trillion (US$156.4 billion) of assets for 4.5 million members as of June 2021.