Most Hong Kong employees contribute to MPF for decades without ever reviewing their fund choices. This is one of the most costly financial mistakes you can make. Fund selection — particularly the management fee — has an enormous impact on your final retirement pot.

The Fee Problem in MPF

MPF funds charge an annual fee called the Fund Expense Ratio (FER). This includes management fees, trustee fees, and other costs. The FER is deducted from your fund's returns every year — you never see it as a bill, but it silently erodes your balance.

The MPF industry average FER is around 1.5% per year. The cheapest funds charge as little as 0.2–0.4%. Over a 35-year working career, this difference in fees can reduce your final balance by 20–30%. On a HKD 1,000,000 retirement pot, that's HKD 200,000–300,000.

1.3%

The average annual fee difference between a typical active MPF fund and a low-cost index fund within the same scheme. Compounded over 35 years on HKD 18,000/year in contributions, this difference amounts to over HKD 200,000 in lost retirement savings.

Index Funds vs Active Funds in MPF

Active funds employ fund managers who make investment decisions aiming to beat the market. They charge higher fees. Index funds simply track a market index (like the Hang Seng or MSCI World) mechanically, with lower fees. Decades of data globally show that the majority of active funds underperform their index benchmark over long periods — especially after fees. For MPF, this strongly supports choosing low-cost index fund options where available.

The Default Investment Strategy (DIS)

If you never chose your MPF funds, you may be in the DIS — the government-mandated default. The DIS has two components:

  • Core Accumulation Fund (CAF): Roughly 60% equities / 40% bonds. FER capped at 0.75%.
  • Age 65 Plus Fund: Roughly 20% equities / 80% bonds. More conservative. FER capped at 0.75%.

The DIS automatically shifts your allocation from the CAF toward the Age 65 Plus Fund as you approach retirement age. The FER cap (0.75%) makes it better than many actively managed funds. But for younger contributors with decades to run, a higher equity allocation than 60% is typically more appropriate.

How to Compare MPF Funds

The MPFA operates MPFexpress (mpfexpress.com.hk) — a free, official platform where you can:

  • Compare all MPF schemes and funds side by side
  • Filter by FER, risk class, and fund type
  • View standardised performance data
  • Understand which funds are available in each scheme

When comparing funds, prioritise: (1) FER — lower is almost always better, (2) appropriate risk level for your age, (3) consistent long-term performance vs benchmark, not short-term rankings.

How to Switch Your MPF

Under the Employee Choice Arrangement (ECA), you can transfer your employee contribution account to any scheme of your choice — once per calendar year. The employer contribution account stays with your employer's chosen scheme until you leave the job.

Switching process:

  1. Choose your target scheme (compare using MPFexpress)
  2. Download the transfer form from the target scheme's website
  3. Complete and submit — the target trustee handles the rest
  4. Transfer typically takes 3–5 business weeks

There is no tax or penalty for switching. The main consideration is that you're temporarily out of the market during the transfer period.

Reviewing Your MPF Annually

Set a reminder every year — perhaps when you file your tax return — to review your MPF. Check: Is your fund allocation still appropriate for your age? Has the FER changed? Has your fund significantly underperformed its benchmark? Are there better options available within or outside your scheme?