According to the Mandatory Provident Fund Schemes Authority (MPFA), the MPF System in Hong Kong was launched as a mandatory, privately managed, fully funded contribution scheme in December 2000.
What you may not be aware is that while mandatory MPF contributions are made by both the employees and the employers, the obligation to choose an MPF Scheme for mandatory contributions rests with the employer. So with such responsibilities resting on the shoulders of the employer, why does Human Resources (HR) know so little about MPF and what can be done?
To understand why your HR managers may know little about MPF we firstly need to go back to the start of MPF because while it’s 20 years old, it appears little has changed. According to the 2020 MPF Employer Expectations Survey (produced by the Employers’ Federation of Hong Kong and independent MPF research provider, MPF Ratings), 36% of employers have retained their same MPF provider since the launch of MPF. In addition to little change, historically there has been little employee interest too. While the legal obligation to fulfill the MPF requirements was always that of the employer and small account balances, employees had little incentive to question employers on MPF matters. A third reason why your HR managers may know little about MPF is that there’s a very high possibility that they weren’t even in the workforce when the initial scheme was chosen! So, with little incentive to ask questions, learn or implement change, the status quo has remained.
But with the average account balance for MPF’s 4.3 million members now at an all-time high of HK$231,000 coupled with the ability for employees to choose their preferred schemes for their contributions, employers will be facing greater scrutiny to fulfill their employee duty of care responsibilities. And by educating yourself, you too can help educate your employer too.
The good news is that as account balances have risen most MPF trustees and administrators are recognizing the importance of education and now provide investment tools and resources for both employers and employees. MPF fund platforms such as www.mympfchoice.com were created to assist users gain a better understanding of one’s MPF needs so to discover which funds best suit you, have the most competitive FERs or perhaps which DIS fund best suits your retirement needs, take advantage of the tools available and also encourage your employer to do so too, and within a few clicks you’ll be better educated and will be making better investment choices too.