eMPF Platform:Vision, Challenges and Way Forward

Ms Alice LawDeputy Chairman and Managing Director

Mandatory Provident Fund Schemes Authority26 Nov 2019

The information contained in this presentation deck is public information and the deck can be retrieved from the MPFA's website (www.mpfa.org.hk).

How does the MPF System operate?

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An open question for those who are not in the MPF industry

A Snapshot of MPF System

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EVERY YEAR :

Some More Statistics

Investment Management

Scheme Administration

Three Elements of MPF Scheme

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02 03

Safekeeping of Assets

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…………………………………………………

……………………………………………………………..............

…..Fund

Management FeeInvestment

Management Fee

Administration Fee / Trustee Fee /

Custodian Fee

Sponsor Fee

37%

47%

15%

Breakdown of Fund Management Fee

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(As of 30 June 2019)

Current State of MPF Scheme Administration

Digital Users39% Employers (on average)

Diverse distribution; less than 10% for some trustees

Manual Users61% Employers (on average)

By Post

Hundreds ofservice outlets,

e.g. bank branches

~30,000 MPF

Intermediaries

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Current State of MPF Scheme Administration (Cont’d )

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Vision of eMPF Platfrom

Transform and enhance the MPF System

Paperless MPF experience to over 4 million members and 300,000 ERs

Benefit ERs,EEs, MPF industry and MPFA

Create room for reducing MPF management fees

Pave way for future reforms – e.g. full portability

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Objectives of eMPF Platform

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Scheme administration

Latest Progress

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Request for Proposal (RFP)

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Category A:• eMPF Solutions• Application Maintenance

Category B:• Infrastructure• Maintenance• Information Security

Category C:• MPF Scheme Operation Services• Transformation Services• User Delivery Services

• RFP exercise has been kicked off

• RFP package is divided into 3 categories:

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Request for Information (RFI)

Request for Proposal (RFP)

Category A: eMPF solutions, application maintenance

Category B: infrastructure, maintenance, information security

Category C: MPF scheme operation services, transformation services, user delivery services

Responding to either one

category will do

Must respond to all 3 categories

Detailed common standards on MPF administration processes and additional functionalities

Not available

Stakeholder engagement Not available

Latest additional functionalities Not available

RFI vs RFP

One-stop “Customer Journey”

User-friendly

“Tech + Service” model

Vision for the Design

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New MPF ecosystem

a combination of hardware, software and services

Fintech x MPF operations

“Best of breeds”

“More than just an IT project”

Challenges

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Current User Behavior

39% employers as digital users

(Diverse distribution: less than 10% for some trustees)

65% of transactions are still paper-based

Most scheme members don’t

actively manage their MPF accounts via electronic means

Current system delivers generally

satisfactory services

High Degree of User Diversity

Diverse cohorts in the MPF System

Diverse degrees of digital literacy and

experience

Complexity of eMPF Platform

More than just an IT project

A change management

process (to overcome a 20-year-

old inertia)

MPFA and MPF industry to promote

digital take-up

Practical Application

Digital transformation and

transition

100% accuracy

Stakeholder Engagement

Organized a series of focus group sessions of the Platform in October and November 2019

Collected opinions and suggestions from future users of the eMPF Platform, i.e. employers, human resources practitioners etc.

Over 100 views and suggestions :• functionalities of the eMPF Platform• users’ expectations of its services etc.

Useful feedback to the development of a more user-centric and “down to earth” platform

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The MPFA is embarking on an overhaul which is like“changing the engine while running the train”

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Way Forward

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Advantages

(1) Faster (2) Simpler (3) Better (4) Cheaper

(1) Faster

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Instant notificationto ERs, EEs after contributions are properly made

Massive time saving for the contribution process and transfer of benefits

Enhance enforcement efficiency for better members

protection

Shorten enrolment process

(2) Simpler

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24/7 Payment Systems for making

contributions

Single log-onwith the support of various AI tools

Easy access to the

contribution reports

Consolidation of personal accounts

(3) Better

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Reduce non-compliance e.g. 5% surcharge due to late payment of contribution

Easier management for holders of multiple accounts

(4) Cheaper

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Reduce MPF management fees

Market openness and seamless platform to drive MPF management fees down through open competition

Paperless administration process

Development Roadmap

2019 • RFP exercise has been kicked off

Parties interested in submitting proposals are requested to enrol in advance with the MPFA starting from 11 Nov

RFP package will be released to enrolled tenderers by email in Dec (tentative date)

Enrolled tenderers have to submit the proposal before the deadline which will be further announced

2020 • Tender award

• System design and development

2021 • Submission of legislative amendment proposal to LegCo to streamline

administration workflows and reduce regulatory burden, etc.

2022 • Target completion date of system design and development

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Thank you

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