29th December 2022
And it wasn’t eMPF
Key points are as follows:
- “Initiative to Enhance Transparency of Governance Reporting of MPF Schemes” elevates transparency, governance, and actions of MPF schemes to an unprecedented level.
- Under the initiative, MPF trustees will be required to publicly report and justify their scheme’s “value for money” level.
- Initiative will shine a spotlight on underperforming MPF schemes.
- Publication of results puts pressure on trustees and scheme sponsors to meet minimum standards and action is taken.
- Total MPF assets to start 2023 at approximately $1.046tr, or an average of $228,600 for each of 4.57m MPF members.
As 2022 draws to a close, Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent provider of MPF research views and opinions today highlighted what his organization believes was the MPFA’s single most significant 2022 initiative, and shared why the initiative has the potential to transform the MPF system in 2023 and beyond.
Acknowledging that MPF members will be disappointed by 2022 performance, Mr Chung reminded members that MPF does not control market returns before pointing out that system stakeholders have a responsibility to create an environment to ensure positive MPF member experiences.
It is MPF Ratings’ view that a quietly issued August 2022 circular to all MPF trustees titled, “Initiative to Enhance Transparency of Governance Reporting of MPF Schemes” has the potential to create such an environment.
Why the MPFA’s “Initiative to Enhance Transparency of Governance Reporting of MPF Schemes” can transform the MPF system
“In accordance with MPFA guidelines, MPF trustees will now be required to justify their scheme’s ‘value for money’ level. Such obligation requires the highest levels of governance because MPF schemes will now not only need to publicly acknowledge deficiencies but will also be required to take action.”
“Mandating MPF trustees to submit and publish their ‘value for money’ findings will hold MPF trustees and scheme sponsors to account while also putting underperforming MPF schemes firmly under a spotlight that leaves them with nowhere to hide.”
MPF trustees have a duty to act in the best interests of MPF members
“The MPFA’s Governance Reporting initiative focuses on improving areas the MPFA can influence and sets measurable standards which, if MPF schemes fail to achieve, will make for some difficult decisions. Trustees have a duty to first and foremost act in the best interest of members.”
Consequences – intended or otherwise
“The public nature of this initiative may embarrass underperforming MPF schemes, but it should also reward high ‘value for money’ MPF schemes too. I am not sure if this is an intended consequence but the MPFA’s initiative to enhance transparency through the Governance Reporting is a positive and potentially transformational one which should benefit MPF members in the years to follow.”