How Hong Kong's new eMPF Platform will impact employers and members
Hong Kong will carry out its most important pensions reform in two decades with the introduction of eMPF Platform later this year.
An electronic platform to be launched by the Mandatory Provident Fund Schemes Authority (MPFA), it will cover all 12 MPF trustees, as well as the 357,000 employers and 4.7 million members that Hong Kong's mandatory pension scheme covers.
EMPF will allow trustees, employers and members to manage the Mandatory Provident Fund's (MPF's) assets - worth HK$1.14 trillion (US$146.15 billion) as of the end of December - through a single electronic platform.
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Here is what you need to know about eMPF.
What is eMPF?
EMPF is a centralised electronic platform that aims to standardise and automate the administration processes of MPF schemes.
At present, the 12 MPF trustees, such as HSBC, Manulife and AIA, each have their own systems to manage their members, and a lot of processes are still conducted manually. EMPF will change such practices, and all trustees, employers and employees will use the electronic platform to handle account openings, contributions, change of investment choices as well as the withdrawal of benefits from the MPF.
The eMPF's purpose is to enhance operational efficiency, reduce administration costs and improve user experience.
Does it mean everyone has to use the platform?
Yes and no. The 12 trustees have no choice but to use eMPF. As far as corporate and individual members are concerned, the MPFA would like them to use the electronic platform, but they still have the option of using paper forms.
What is the launch timeline?
The platform will kick off in the second quarter of this year, with one of the five smallest MPF trustees to move onto the platform first. Then the other four will be added to the platform one by one. A detailed timeline will be announced later.
The five early adopters are YF Life Trustees, China Life Trustees, Bank of Communications Trustee, Standard Chartered Trustee (Hong Kong), and Bank of East Asia (Trustees). Larger players such as Manulife, HSBC and AIA will be added at a later stage, but the whole migration is expected to be completed by the end of 2025.
What does eMPF mean for the MPF's 4.7 million scheme members?
MPF members will "save time, save money" after they join eMPF, according to MPFA managing director, Cheng Yan-chee.
The processing times of MPF administration transactions will be shortened due to the digitalised mode of operation. For example, if a member wants to combine several MPF accounts, the time needed will be shortened to about one week under eMPF instead of two to three weeks currently.
"Scheme members are expected to enjoy cost savings of 30 per cent in administration fees in the first two years when the platform is in operation, and up to 41 per cent to 55 per cent over a 10-year period," Cheng said.
Manulife, the biggest pension provider in Hong Kong, said eMPF can enhance customers' experience. "MPF members can perform multiple MPF administration functions at one place, including accessing account details, switching funds, consolidating accounts and withdrawing MPF benefits," said Jeanie Ho, deputy head of Hong Kong and Macau retirement at Manulife.
"This is expected to bring about increased transparency and efficiency."
What will eMPF mean to the scheme's 357,000 employer members?
Employers will benefit from easier, faster and less burdensome administration, Cheng said.
EMPF Platform will address pain points troubling employers, because administration tasks such as enrolment of employees, calculation of MPF contributions and making payments will all become easier and faster, Cheng said.
Jamie Lee, managing director and CEO of BCT Group, an MPF trustee, said eMPF Platform could create significant advantages for scheme members and employers.
"This real-time, paperless and one-stop system enables scheme members and employers to have a hassle-free account management experience," Lee said.
Will the platform replace the trustees?
No. The 12 trustees will continue to serve the MPF's 4.7 million members, but they will all need to use eMPF to manage the schemes.
"The eMPF platform will reduce trustees' administrative burden, as well as the associated compliance burden and costs, opening up opportunities for the industry to rationalise their workflow and reduce business costs," Cheng said.
Manulife's Ho said after the firm joins eMPF, it will further enhance digital services for companies and individual members. "The key focus area for us is to ensure our customers manage their MPF accounts with ease and have a hassle-free onboarding process as we transition to the eMPF platform," she added.
Manulife will have a special team educating customers about eMPF, while thousands of its agents will act as eMPF ambassadors, providing personalised help and support for MPF account management.
How will eMPF enhance Hong Kong's pensions system?
EMPF Platform will pave the way for future MPF reforms, such as full portability, and government initiatives such as making contributions for low-income workers to increase their retirement savings, Cheng said.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
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