Members in the HK$365 billion ($46.8 billion) Mandatory Provident Fund, which is expected to triple in size in the next 10 years, have a new comparison tool to help them decide their service provider and investment options.

Towers Watson has launched the online comparison tool and a supporting quarterly magazine specifically targeting MPF members ahead of the implementation of the “employee choice arrangement”.

The MPF, which was started in 2000, consists of dozens of schemes operated by service provider organisations. Members receive a tax deduction for their contributions but in the past year there has been an intensifying lobbying effort to improve the attractiveness of the scheme.

For instance, in a survey of members last year, more than 60 per cent said they would contribute more if employers were willing to match their contributions or if the tax-deductible limits were raised.

Naomi Denning, Hong Kong-based managing director of investment services for Towers Watson Asia Pacific, said the objective of the tool was to encourage a long-term approach by investors, as well as proving them with the information to make appropriate choices.

Research by Towers Watson has shown that the top three drivers of member decisions were the service providers’ “brand”, past performance and fees. Other research has shown that brand and past performance, at least, offer no guide to future performance. This situation is likely to be exacerbated when the employee choice arrangement, which makes for easier switching, comes into force later this year, although there will also be greater competition between service providers.

The portal address is: www.mpfexpress.com. The magazine will be available as a PDF on the site as well as in hard copy.

Greg Bright is executive chairman of Conexus Financial. He has 30 years experience as a financial journalist and publisher and has previously started two companies – Trade News Corporation in the 1980s (later acquired by the Reed Group) and InvestorInfo (a listed company acquired by Morningstar). Prior to becoming a publisher, in 1983, he was assistant editor of the Australian Financial Review and before that an economics writer for the Sydney Morning Herald.
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