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The Mandatory Provident Fund Schemes Authority (MPFA) today (8 June 2016) made its submission to the Commission on Poverty (CoP) on the public consultation on retirement protection.
 
MPFA Chairman Dr David Wong said, “The MPFA strongly supports the approach that retirement protection for the community at large must be based on multiple funding sources and that Hong Kong must continue to adopt the multi-pillar model advocated by the World Bank. The MPF System is an integral part of retirement protection in Hong Kong, and cannot and should not be replaced by any of the other pillars.”
 
Dr Wong said that in the past 15 years the MPF has played an important role in helping the employed accumulate savings for basic retirement protection. At present, 85% of Hong Kong’s employed population (about 3.2 million) is covered by the MPF System or some other form of retirement scheme, while before the MPF System was launched, it was estimated that only one-third of Hong Kong’s employed population was covered by any sort of occupational retirement protection scheme. In addition, as at the end of March 2016, the total asset size of the MPF System reached almost $600 billion, and almost $100 billion of which was net investment returns.
 
He said the MPFA agrees with the long-term goal of the CoP to continue to strengthen the MPF System to supplement the other pillars and to better perform its retirement protection function.  
 
To address the problems of “high fees and difficulty of making fund choices”, he said the MPFA will launch the Default Investment Strategy (DIS) to provide a simple, fee-controlled investment strategy for MPF members, designed to be consistent with the objective of building up long-term retirement savings.
 
To encourage scheme members to pay more attention to their MPF investment and to manage their MPF accounts, the MPFA will step up publicity and education to deepen and broaden the public’s understanding and acceptance of the System. The MPFA will soon launch a large-scale publicity campaign to prepare scheme members for the introduction of the DIS.
 
To improve the efficiency of MPF scheme administration and to lower the operating costs, the MPFA will propose to the Government that more fundamental reforms be considered to standardize, simplify and automate MPF scheme administration. Through the development of an electronic infrastructure (tentatively called “eMPF”), the MPFA seeks to lower the operating costs of MPF providers, allow employers and scheme members to deal with various MPF matters more conveniently and efficiently, and provide scheme members with more flexibility and better-quality services.
 
He added that implementing full portability is the MPFA’s long-term objective and the electronic infrastructure to be developed will facilitate full portability.
 
Dr Wong said the MPFA also agrees with exploring the feasibility of raising the MPF contribution rate at an opportune time and supports the efforts of the Government to find a solution for the severance payment/long service payment offsetting arrangement. The MPFA is also of the view that one should take a broader perspective when discussing what types of incentives be provided to which parties so as to effectively encourage further long-term retirement savings for those most in need.
 
“The discussion on the future development of retirement protection will have a far-reaching impact on Hong Kong society. The MPFA hopes that the different sectors will have a good understanding of the role and functions of the MPF System when discussing the way forward on this very important topic,” he said.
 
The submission has been posted on the MPFA website.


Mandatory Provident Fund Schemes Authority Chairman Dr David Wong (right) and Managing Director Diana Chan (left) host a media briefing on MPFA’s submission to the Commission on Poverty on its public consultation paper entitled “Retirement Protection, Forging Ahead”.

 
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8 June 2016