LCQ2: eMPF Platform
15.3.2023

Following is a question by the Hon Chau Siu-chung and a reply by the Secretary for Labour and Welfare, Mr Chris Sun, in the Legislative Council today (March 15): Question: It has been reported that the Mandatory Provident Fund Schemes Authority (MPFA) indicated earlier on that due to problems with the contractor responsible for building the eMPF Platform (the Platform), it was estimated that the overall progress for building the Platform would be delayed by eight months as compared with the original schedule. There are views that the delay in the launch of the Platform will directly affect the implementation of the abolition of the Mandatory Provident Fund (MPF) "offsetting arrangement" and the Government's proposal to make MPF contributions on behalf of employees and self-employed persons who are exempted from making MPF contributions due to low income; the public's wishes for an across-the-board reduction in MPF administration fees through the operation of the Platform will at the same time be delayed or even come to nothing. In this connection, will the Government inform this Council: (1) as it has been reported that the Government has indicated that if any hindrance is encountered in the course of building the Platform, the authorities will prepare a "simple fallback plan" to deal with issues relating to the abolition of the offsetting arrangement, so as to ensure that the implementation time for the abolition of the offsetting arrangement will not be affected, whether the Government will expeditiously set the implementation date for the abolition of the offsetting arrangement and announce the specific details of the aforesaid fallback plan; (2) of the specific implementation timetable of the Government's proposal to make MPF contributions on behalf of the aforesaid low-income persons; whether the Government will, in the light of the delay in the launch of the Platform, introduce a retrospective period for the contribution arrangement; and (3) as the MPFA has indicated that the Platform will standardise, streamline and automate the administration processes of MPF schemes, aiming for a reduction in the administration fees of MPF schemes by as much as 55 per cent, whether the relevant target will be adjusted in the light of the delay in the launch of the Platform, and whether a timetable is in place for implementing the reduction in the administration fees of MPF schemes? Reply: President, In consultation with the Financial Services and the Treasury Bureau, the consolidated reply to the question is as follows: The eMPF Platform seeks to standardise, streamline and automate the administration processes of Mandatory Provident Fund (MPF) schemes, thereby enhancing operational efficiency of the MPF System, reducing administration costs and improving user experience. The Mandatory Provident Fund Schemes Authority (MPFA) and its wholly owned eMPF Platform Company Limited (the Company) have engaged a contractor in 2021 to build the eMPF Platform. According to the contract schedule, the Contractor is required to deliver the eMPF Platform in the second quarter of 2023 for orderly onboarding of MPF schemes in phases, with a view to completing all onboarding work and achieving full implementation of the Platform in 2025. Over the past two years, the MPFA and the Company have been overseeing the Contractor's work progress proactively and closely through a multi-pronged monitoring and reporting mechanism. During the process, the MPFA and the Company have taken prompt follow-up actions on the Contractor's work progress, quality and bottleneck issues and requested the Contractor to handle these issues properly, while making the best endeavours to ensure the timely delivery of the eMPF Platform Project. However, based on the Contractor's assessment, it is highly likely that the delivery of the eMPF Platform will be delayed by eight months as compared to the requirement as stipulated in the Contract. Yet, the ultimate target of completing the onboarding of all MPF schemes within 2025 and making the Platform fully functional in the same year remains unchanged. The reply to the three parts of the question is set out below: (1) The Legislative Council passed the Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Bill 2022 in June 2022 to abolish the use of the accrued benefits of employers' mandatory contributions under the MPF System to offset severance payment (SP) and long service payment (LSP) (the abolition). The Government has undertaken to implement the abolition no later than 2025 and will announce the implementation date of the abolition in due course. The abolition involves hundreds of thousands of employers and millions of employees. We are pressing ahead with the publicity work, including explaining to employer associations, labour unions and human resources practitioners the abolition arrangements; and launching a thematic website to help employers and employees understand the abolition arrangements and calculate the expenses concerned. The Government reiterates that the abolition will formally take effect in 2025 by way of stipulation in subsidiary legislation. To complement the formal implementation of the abolition, the Government is actively taking forward the supporting measures. The Government will provide a 25-year, $33.2 billion subsidy (in 2021 prices) to employers to help them adapt to the policy change by sharing out the post-transition portion of SP/LSP. We plan to seek funding from the Legislative Council in the middle of this year for developing the information technology system for the Government subsidy scheme. In addition, the Government has commissioned a consultant to study the Designated Savings Accounts Scheme and will consult stakeholders after finalising the way forward. (2) The Government will implement the initiative of paying MPF contributions for employees and self-employed persons who are exempted from making MPF contributions due to low income after the full operation of the eMPF Platform. The Government and the MPFA is now working on the details of the initiative. As the initiative involves hundreds of thousands of low-income persons, it is necessary to rely on a centralised electronic platform to process the voluminous data. The eMPF Platform can provide centralised and reliable data that facilitate accurate calculation and processing of the Government's MPF contributions for the persons concerned. The Government and the MPFA will closely monitor the progress of the Platform and implement the initiative as soon as possible. (3) Once the eMPF Platform is ready for use for orderly migration of MPF schemes, we expect that the average MPF administration fee will reduce by around 30 per cent during the first two years of operation (assuming a Platform fee of about 30 to 40 basis points (bps) during the initial two-year onboarding phase). The administration fee will continue to drop steadily thereafter to about 20 to 25 bps after 10 years of operation, meaning a fee reduction of over 50 per cent. The total cumulative cost savings in the first 10 years of operation of the eMPF Platform is estimated to be $30 billion to $40 billion for the benefit of scheme members. Since the target of completing the onboarding of all MPF schemes and achieving full implementation of the eMPF Platform by 2025 remains unchanged, based on the assessment by the MPFA and the Company, the above-mentioned overall cost savings targets and timetable will not be affected by the current Project progress.