The Mandatory Provident Fund Schemes Authority is working on changing the law to limit MPF providers’ management fees to 0.75 percent of assets, and the cost ratio, taking all other expenses into account, to 1 percent.
Legislation being prepared would require each provider to run two core funds with preset investment strategies where the level of risk taken depends on the age of the fund holder, the Hong Kong Economic Journal reported Friday.
The authority aims to submit a draft bill to the legislature by the end of this year and introduce the new rules by the end of next year.
The two core funds will be required to cater to two separate age groups.
One, for people under 50, will invest 60 percent of its assets in global equities or other high-risk assets, and the rest in global bonds.
The other, for people 65 or over, will allocate only 20 percent of its assets to high-risk investments.
The authority will further discuss with market players the investment strategy for funds oriented to people aged 50-65.
About a quarter of the 2.7 million members of the MPF scheme have not allocated their holdings among funds with different investment strategies.
They represent over HK$50 billion, or 10 percent, of the scheme’s total assets under management.
Translation by Vey Wong
[Chinese version 中文版]
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