The MPFA has reduced the fee for the lazy fund. It has launched a two-load limit of 0.95%. Review before April next year.
The MPF default investment strategy (DIS), commonly known as the “lazy fund”, has been launched for nearly two years. The MPFA will review the fee levels by April 2020. The MPFA Chairman, Mr Wong Wai-kwai, believes that the MPF trustees are responsible for collecting employer contributions. The amount of contributions is also smaller than that of the general investment funds. Therefore, the current fee level of 0.95% is considered to be good, but the relevant fees will be further studied.
When Huang Youjia attended the National People’s Congress meeting in Beijing, he accepted an exclusive interview with the newspaper. He pointed out that the management fee for the “lazy fund” was set at 0.95%. It is already cheaper than the market average MPF fee of 1.52%. The MPF trustee is responsible for collecting employers. Contributions, and the monthly silver payment per account is small, taking the monthly salary of 15,000 Hong Kong dollars as an example. The employee contribution (5%) is only 750 yuan. “General stocks and fund investments will not be so fragmentary, taking into account the operation. Cost, 0.95% of the charges are good, but the MPFA will still study whether there is room for downward adjustments.
He reiterated that the original intention of launching the “lazy fund” is to give employees one more choice. The “core accumulation fund” with a debt ratio of 64% is too conservative for young people. It may not be applicable. Therefore, it is not necessary to use the “lazy fund” asset scale. Success or failure; and the fund has been around for two years, has pushed nearly 20% of the market fund to reduce fees, the highest reduction of 55%, reflecting good results.
eMPF platform for price competition
The MPFA is expected to launch the “EMPF” platform in phases in 2022. Initially, it will allow wage earners to check all MPF accounts in the first place and compare the fees and performance of the MPF schemes. In the long run, you can pave the way for MPF “all free travel.” Last month, the Red Bureau recommended that the “Jianjinyi” platform should be launched in a one-off (Big bang) rather than in stages.
Huang Youjia thanked the Bureau for recommending that “all you want to do”, but the “Jianjinyi” system is huge. It is still waiting for the Legislative Council to approve nearly $3.4 billion in the Budget to formally start bidding and establish a platform. It involves all Hong Kong wage earners and employer accounts. Therefore, there is no room for loss when opening. It is also a bit of an urgent time to open in 2022. He believes that the first stage is available for access to accounts and prices, which has increased transparency and promoted competition.
The Bureau also recommends that employees participate in voluntary contributions, increasing the overall contribution to income ratio from the current 10% to 15%, supplemented by tax incentives. At present, the Government has increased the maximum amount of tax deduction for voluntary contributions to $60,000. Mr Wong agreed that the proportion of Hong Kong’s contributions was low. The tax deduction was attractive to the increase in contributions. However, some members of the public were “over 10%.” He believed that the MPF system should be improved to enhance the public’s perception. It is proposed to increase the proportion of contributions, I believe it will be more natural.