Government motions： PROPOSED RESOLUTION UNDER THE MANDATORY PROVIDENT FUND SCHEMES ORDINANCE
President, since its launch in 2012, the Mandatory Provident Fund (“MPF”) “Semi Portability” has been well received by employees. Data also shows that between 2020 and 2024, an average of $4.8 billion in funds was transferred annually through “Semi Portability”, representing a 27% increase compared to the previous five-year period from 2015 to 2019. Just now, the Secretary also mentioned that, as of March this year, the cumulative number of transfer cases has exceeded 1 million, involving more than $50 billion. This reflects not only employees’ active utilization of the mechanism, but also their growing awareness of, and proactive participation in, managing their retirement assets.
However, employees are currently only permitted to transfer their own MPF contributions to a scheme of their choice. Employer contributions, which are subject to offsetting against severance payments and long service payments, cannot be transferred freely. This limits employees’ flexibility and choice in investment management. With the abolition of the MPF offsetting arrangement on 1 May and the eMPF Platform due to become fully operational next year, both the institutional and technological foundations are now in place, creating favourable conditions for implementing MPF “Full Portability”. I support the Government’s phased implementation of “Full Portability”, starting with newly hired employees and gradually extending to existing employees.
Many of my fellow Panel members have also asked the authorities whether more than one transfer per year could be permitted. The authorities’ response, as mentioned by the two Members, is that as MPF is a long-term investment, frequent transfers may lead to short-term speculative behaviour, and employees holding multiple small accounts may impair management efficiency. A once-per-year transfer generally meets management needs and helps reduce administrative costs. I fundamentally concur with the authorities’ analysis. However, while the financial markets have been relatively stable in recent years, future market fluctuations may become more pronounced and rapid. In fact, some degree of flexibility could be introduced between one and X. For example, might it be feasible to allow two transfers per year or three transfers every two years? This could potentially facilitate a more responsive approach to market fluctuations, enhancing the system’s resilience and user-friendliness.
Concurrently, administrative fees remain a key concern for employees. MPF administrative charges are usually 1.35%. With increasing digitalization in recent years, related processes have shifted progressively from manual to automated operations, effectively reducing administrative expenses and enhancing operational efficiency. The Mandatory Provident Fund Schemes Authority (“MPFA”) has also stated that with the full implementation of “Full Portability” and the eMPF Platform, administrative costs could be further compressed by up to 65%. This should enable scheme members to manage their retirement assets at a lower cost while also driving trustees to improve their service quality.
However, what I believe most in is this: once “Full Portability” provides working individuals with more investment choices, competition will naturally lead to further downward pressure on administrative fees. I have also noted that the Government and MPFA have produced promotional videos to raise awareness of the eMPF Platform. After “Full Portability” is launched, I believe the Government should step up its promotional efforts. For example, it could take inspiration from the mobile promotional vehicles used when the Employee Choice Arrangement was introduced in 2012. These vehicles could travel across all districts in Hong Kong to explain the “Full Portability” proposal to the public, assist them with on-the-spot registration for the eMPF Platform, demonstrate platform operations, and encourage them to consolidate and diversify their accounts and regularly review their investment portfolios. This would promote a shift among the public from passively making contributions and accepting current investment returns to actively managing their accounts and making investment choices according to their own risk tolerance levels.
President, there is a saying often heard in the financial circle: “If you don’t manage your money, your money won’t manage you.” MPF is not just a form of savings; it is a crucial part of every working person’s financial planning. Only through active participation and proactive management can one build a solid foundation for future retirement and achieve a secure and self-reliant later life. I so submit. Thank you, President.