Shrinking options: mergers and acquisitions alter landscape for MPF customers

The Mandatory Provident Fund (MPF) has experienced a period of consolidation since its launch in 2000, as financial institutions and banks search for better ways to manage and distribute their products.

This has resulted in partnerships that allow MPF providers to expand their distribution network, and provide employers and employees with better access to a broader range of products.

The trend started in the early 2000s with Principal Financial Group’s acquisition of Dao Heng Fund Management from the Guoco Group in 2004, which followed the 2003 merger of DBS Kwong On Bank, Dao Heng Bank and Overseas Trust Bank to form DBS Bank.

In September 2015, AXA completed the sales of its MPF and Occupational Retirement Schemes Ordinance (ORSO) businesses in Hong Kong to the Principal Financial Group. The two companies also entered into a 15-year exclusive distribution agreement allowing Principal to offer MPF and ORSO schemes through AXA’s proprietary networks in Hong Kong.

Sun Life Hong Kong announced in August 2016 that it would acquire FWD Hong Kong’s MPF and ORSO businesses. The two companies also entered into a 15-year distribution agreement allowing FWD’s agency to distribute Sun Life’s MPF and ORSO products in Hong Kong. The transactions are expected to be completed during 2017 and 2018.

In November 2016, Manulife completed its acquisition, announced in September 2015, of Standard Chartered’s existing MPF and ORSO businesses and its related investment management entity. This marks the beginning of their 15-year distribution partnership which will give Manulife the exclusive right to offer its MPF products to the bank’s customers in Hong Kong.

Stephen Man, head of wealth management of Standard Chartered Hong Kong, says the partnership leverages the bank’s strong franchise and distribution network to provide its customers quality wealth solutions, including retirement services, to meet their financial goals.