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Enoch Yiu

HSBC, Hang Seng Bank, AXA China Region, and Schroder have won the rights offered by the SAR Government to act as Mandatory Provident Fund (MPF) trustees for its 29,000 contract staff, according to sources.

After a month-long tender process, the SAR Government chose five MPF master trusts offered by the four pension providers, the sources said.

The appointments will provide a clear competitive edge to the four elected providers in the keenly contested industry.

HSBC is the biggest winner as its two MPF master plans - one with 10 investment options and the other with five choices - were both selected.

Hang Seng Bank, the 62 per cent-controlled subsidiary of HSBC, also secured selection with an MPF plan featuring five investment choices.

Source said HSBC and Hang Seng Bank both could provide more than 360 branches, which would make it more convenient for the payment of pension contributions.

AXA China Region, one of the largest local life insurers, offers seven investment options in its plan.

The insurer's French-based parent, AXA Group, is the largest insurance company in the world in terms of assets, which weighed in as an important element in the Government's decision, the source said.

The group manages about US$700 billion worth of assets.

Fund manager Schroder Investment Management Asia is also on the list with an MPF plan of 10 investment choices for Government employees. Schroders was one of the largest providers in the employee-choice pension scheme.

Analysts said the tender result was broadly in line with market expectations since many observers believe the HSBC Group, as the largest pension provider and No 1 banking group in Hong Kong, would be most likely the biggest winner.

They said the Government's selection had shown it sought to provide employees with a variety of options.

A spokesman refused to confirm any decision, saying only that the Government was in the 'final stages' of the tender process and would make an announcement soon.

The SAR employs 29,000 contract staff who are not covered by the Government provident fund, which provides retirement schemes for 200,000 long-term civil servants.

As a result, the Government, as with other SAR employers, was required to set up MPF schemes for its contract staff.

Due to be launched in December, 300,000 local companies which do not have a pension scheme, must establish an MPF plan for the 2.2 million working population.

The Government's announcement is expected to set an example for employers to sign up their MPF plans as soon as possible, especially since the rate of sign-ups has been slow.

From the end of July, only 16 per cent of companies obliged to set up MPF plans have done so, with 250,000 firms leaving it to the last minute.

A source said after the tender announcement the SAR Government would ask the winning MPF providers to hold seminars to explain the pension plans to contract staff who could make an informed choice on their options.

AXA China Region's MPF head Alex Cheung Kim-fung refused to comment about the appointment, although he admitted the insurer had submitted a tender as the SAR Government was one of the most desirable clients for providers.

The Government was one of the largest employers in Hong Kong and provided a huge opportunity to MPF trustees, Mr Cheung said. Spokesmen at HSBC and Hang Seng Bank also refused to comment.

Sources said the Government had asked 20 MPF trustees to submit 50 schemes for the tender.

CEF Lend Lease, an alliance of American International Assurance and Jardine Fleming, and Fidelity, have also submitted tender bids.



Four win Government MPF tender