Submission to the Mandatory Provident Fund Schemes Authority in Response to the Consultation Paper on Full Portability of MPF Benefits under the MPF System

1. The Consumer Council (the Council) is pleased to submit its views with respect to the consultation paper issued by the Mandatory Provident Fund Schemes Authority (MPFA) on the proposals to implement full portability of Mandatory Provident Fund (MPF) benefits under the MPF System (the Proposals).

The Council’s Overall Views

2. The Council acknowledges the MPFA’s comprehensive consideration in developing the Proposals by taking into account smoothness of transition, scheme members’ choice and system efficiency (para. 38 of the consultation paper).  Regarding the smooth transition, the Council emphasises it should be under not only the abolition of Offsetting Arrangement but also the whole implementation period of full portability.

3. In terms of scheme members’ choice, apart from providing addition options for scheme members to transfer their employer mandatory contributions (ERMC), the Council deems the choice of MPF fund types is of equal importance.  There are currently five major types of MPF funds for scheme members to choose from (including equity funds, mixed assets funds, bond funds, guaranteed funds and MPF conservative funds).  However, according to a survey conducted by Mercer in 2025, still up to 47.5% of respondents expected “comprehensive fund choice”_[1].  The Council suggests the MPFA keep monitoring the investment market and consider increasing the variety of investment tools in the long run when relevant financial products become more mature and legally available on the market (such as fiat-referenced stablecoins).  Meanwhile, the Council also invites the MPFA to examine the feasibility of allowing scheme members to utilise their contributions for important life event purposes in the future (such as healthcare expenditure and property purchase) given the higher autonomy they could enjoy over the increasing amount of contributions after the implementation of full portability.

Frequency and Amount Basis of Full Portability Transfers

4. The Council in principle agrees with the Proposals that the frequency and amount basis of full portability transfers should be aligned with the Employee Choice Arrangement (ECA) as it can avoid a significant increase in the number of transfers and small-balance accounts, thereby reducing administrative costs.  However, as both the ECA and the full portability approaches would allow transferring contributions once a year, the Council seeks the MPFA to clarify whether the two types of transfers would be counted separately (i.e. twice per year in total) or together (i.e. once per year in total).

5. While understanding the proposed once-a-year frequency reflects the principle that MPF should be a long-term investment, the Council invites the MPFA to review the frequency requirement regularly, and consider increasing the frequency in appropriate timing taking into account the flexibility for scheme members and administration costs involved.  The Council believes that an increase in frequency would empower consumers with higher flexibility to make transfers in response to the rapid changes in both the local and global economies, particularly as the performance of trustees could vary in view of different events at different times.

Implementation of the Proposals by Phases

6. The Council understands the need to implement the Proposals by phases (para. 58 of the consultation paper) as it would take a longer lead time to undergo legislative amendment to the Employment Ordinance for effecting the extended proposal compared to the core proposal.  Nevertheless, the Council urges the MPFA to release a more concrete execution plan and timetable at the soonest possible to enhance information transparency.  With further details, scheme members could plan ahead on their future transfers accordingly.

7. In addition, the Council notes that under the extended proposal, for existing employee (EEs) whose employment commences before the transition date under the abolition of Offsetting Arrangement, the ERMC (regardless of the time) saved in the designated ERMC accounts can still be used to offset the pre-transition portion of long service payment or severance payment (para. 46 of the consultation paper), and that only MPF benefits remaining in the designated ERMC account after cessation of employment and offsetting of the pre-transition portion can be transferred to a personal account in an MPF Scheme of EEs’ choice (para. 51 of the consultation paper). 

8. Nevertheless, given that increased diversity of account types and complexity of changes under the Proposals, the general public might encounter confusion and not necessarily have the knowledge to distinguish different arrangements.  For instance, some existing EEs might misunderstand they are eligible to transfer their ERMC to their personal accounts as long as the ERMC are made after 1 May 2025 and have confusion over whether the post-transition EMRC can be used for offsetting purposes.  Therefore, the Council is of the view that the MPFA and trustees should intensify its current education efforts and support (such as training and information provision) to employers and EEs on the new features pertaining to the full portability of MPF benefits, especially in cases where there are EEs leaving or joining a company. 

Other Comments

9. The Council notes that the full portability of MPF benefits and the abolition of Offsetting Arrangement are only part of the holistic reform planned by the MPFA; in addition, there was the launch of the eMPF Platform in 2024.  To advocate comprehensive consumer protection in different aspects of the MPF reform, the Council puts forward the below suggestions for the consideration of the MPFA.

Further Reduction in Management Fees and Transparency Enhancement

10. The Council recognises related efforts of the MPFA over the years, such as the establishment of the MPF Fund Platform in 2019, which discloses to the public the breakdown of fees (namely administration fee, investment management fee and sponsor fee) and the fund expense ratio,  and the launch of eMPF Platform in 2024, which is anticipated to reduce the administrative cost by around 41% to 55% over the next decade_[2].  As a result, the average fund expense ratio dropped from 2.1% in 2007_[3] to 1.34% as at the end of March 2025_[4], a decrease of 36%.

11. The Council also notes that the MPFA has already asked trustees to review whether there is room for further fee reduction in their funds and submit a five-year fee reduction strategic plan, and will conduct a comprehensive review of the overall fee reduction situation after all plans transition to the eMPF Platform_[5].  The Council is of the view that the details should be publicly announced and implemented according to a well-planned timeline so as to further ease the burden of scheme members and enhance their right to know (such as whether the fee reduction targets are met as scheduled) at the soonest possible.

Proactive Monitoring During the Implementation Period

12. The Council anticipates that, during the implementation of the MPF full portability, there may be a substantial increase in the number of enquiries, with a potentially broad range of issues involved.  As such, the Council recommends that the MPFA keep monitoring the number and nature of such enquiries.  If necessary, the MPFA might prioritise resources in improving the implementation of the Proposals and clarifying issues often enquired by scheme members (such as publishing relevant answers on its “frequently asked questions” webpage) in a timely manner.

Smooth Operations and Cybersecurity of the eMPF Platform

13. The Councils notes that a series of enhancement measures have been implemented to improve the operations and cybersecurity of the eMPF Platform and user experience, such as increasing clarity of user interface, conducting security risk assessment and audit, and stepping up trial use and user training_[6].  The Council recognises these efforts and invites both the MPFA and the eMPF Platform Company to continue to monitor and review the performance of the platform as the Council anticipates that the increasing usage and the growing cybersecurity risks might impose certain impacts on its operations.

14. Furthermore, the Council notes the MPFA expected to integrate Artificial Intelligence technology (AI) into the eMPF platform_[7].  While the Council supports this initiative to improve service efficiency and quality, the Council stresses that proper measures should be put in place to tackle the potential risks that AI may pose to cybersecurity and personal privacy.   Besides, the Council considers that the MPFA should respect scheme members’ right to know and right to choose by providing them with adequate information about the use of AI and the opt-out options where appropriate.

Conclusion

15. The Council welcomes the MPFA’s commitment to promoting full portability of the MPF and implementing a series of related measures to enhance the public’s autonomy and liberty regarding the choice of MPF scheme.  The Council believes the above suggestions will contribute to the improvement of the MPF system reform, ultimately ensuring a more secure and well-planned retirement for Hong Kong consumers in the future.