1 Hong Kong Shue Yan College ECON 310 Financial Institutions in Hong Kong Term Paper 2006 Fall

Quin2 The Comparison between the MPFs provided by Bank (HSBC) and Insurance Company (Manulife)

Quin3 Section 4, Group Christy, Cheung Wai Hung Annie, Chong Suet Yan Roxanne, Yu Kwan Yee Carrie, Ho Ka Lai Quin, Leung Pui Shan Katy, Lee Wai Kit

Quin4 Introduction of MPF pension plan

Quin5 What is a pension plan? –an asset pool –represent the fastest-growing financial intermediary.

Quin6 Reasons pension plan becomes popular –Life expectancy increase –Ageing problem

Quin7 Type of pension plans –Private Pension Plans –Public pension Plan Sponsored by a governmental body. e.g., MPF

Quin8 Public pension Plan Mandatory Provident Fund (MPF)

Katy9 Key features of the MPF –Coverage and Exemption Coverage: Employee, Employer, Self-Employed Person Exempt persons: Domestic employees, Self- employed hawkers;

Katy10 Key features of the MPF –Contributions Both employers and employees pay a minimum contribution of 5% of relevant income Self-employed persons have to contribute 5%.

Katy11 Key features of the MPF minimum and maximum levels of relevant income are: –Minimum- HK$4,000 per month –Maximum - HK$20,000 per month can withdraw accrued benefits in a lump sum at the age of 65

Katy12 Key features of the MPF Immediate Vesting Contributions paid and investment earnings are fully and vested with the member as accrued benefits.

Katy13 Key features of the MPF Portability When a member changes job, benefits can be transferred Preservation Benefits will be preserved and became payable at age of 65 or die

Annie14 Description of HSBC and Manulife Background of HSBC

Annie15 Background of HSBC –one of the world’s largest banking and financial services organizations –operated in Hong Kong more than 140 years –has over 9,700 offices in 77 countries and territories

Annie16 Background of HSBC –The leader position in the pension market –HSBC and subsidiary Hang Seng Bank have secured 400,000 employees for MPF –40% targeted market share in the MPF business.

Annie17 MPF Product in HSBC HSBC offers two master trust schemes –SuperTrust –SuperTrust Plus

Annie18 SuperTrust MPF Scheme members with less investment experience investment time frames from short to long term

Annie19 SuperTrust MPF Scheme 5 different funds –Capital Preservation Fund (low-risk) –Guaranteed Fund (low-risk) –Balanced Fund (medium-risk) –Growth Fund (high-risk) –Hang Seng Index Tracking Fund (high-risk)

Annie20 SuperTrust Plus MPF Scheme members with a greater investment knowledge and experience In addition to 5 SuperTrust Funds, it offers 5 more funds

Annie21 SuperTrust Plus MPF Scheme –Stable Growth Fund (medium-risk) –Asian Equity Fund (high-risk) –European Equity Fund (high-risk) –Hong Kong Equity Fund (high-risk) –North American Equity Fund (high-risk)

Annie22 HSBC MPF Service Quality MPF Management Keeping information up to date Smart Money Management and Fund Switching

Annie23 HSBC MPF Service providing convenient communication –Hotline –Website –Branch and ATM network

Roxanne24 Description of HSBC and Manulife Background of MAULIFE

Roxanne25 Background of MAULIFE conducts business in Hong Kong for more than 100 years expanded into MPF market since 2000 one of the largest player in the MPF market (15.5% market share)

Roxanne26 Background of MAULIFE more than 720,000 pension accounts managing pension assets at about HK$307 billion

Roxanne27 MPF Product in MANULIFE Two MPF schemes Manu-Lifestyle (MPF) Scheme Manulife Global Select (MPF) Scheme

Roxanne28 Manu-Lifestyle (MPF) Scheme provided to conservative investors Simple and efficient approach

Roxanne29 Manu-Lifestyle (MPF) Scheme 5 different Funds –Capital Preservation Fund –Interest Fund –Stable Fund –Growth Fund –Aggressive Fund

Roxanne30 Manulife Global Select (MPF) Scheme provided to sophisticated and conservative investors offers a choice of investment expertise and extensive range of funds

Roxanne31 Manulife Global Select (MPF) Scheme provides eleven more funds than Manu- lifestyle Scheme provide a very aggressive high-risk option –Manulife MPF China Value Fund

Roxanne32 Manulife MPF Service computerized call center personal visits customer-oriented seminars

Roxanne33 Manulife MPF Service Newsletters regular benefit statements on-line service centre Smart Call telephone service.

Christy34 Comparison between the MPF Scheme of HSBC and Manulife

Christy35 III. Comparison between the MPF Scheme of HSBC and Manulife Two MPF Scheme –Low-risk Fund –Medium-risk Fund –Aggressive High-risk Fund

Christy36 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme

Christy37 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme provided to conservative investors provided to less investment experience investor

Christy38 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme Conservative Low-Risk Fund –Manulife Capital Preservation Fund Interest Fund –HSBC Capital Preservation Funds Guaranteed Fund

Christy39 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme Capital Preservation Funds –mandated by the MPF Schemes Ordinance –do not have a guarantee of capital and interest

Christy40 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme invest in grade Hong Kong dollar denominated monetary instruments Manu-lifestyle Scheme HSBC Super Trust Scheme Performance as at October Capital Preservation Fund Since Launch (%)

Christy41 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme Manulife Capital Preservation Fund –mainly hold Hong Kong Bonds –stable return as the prescribed savings rate published by the MPFA HSBC Capital Preservation Fund –100% hold in Hong Kong dollar denominated monetary instrument –achieve a rate of return higher than the average bank saving rate

Christy42 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme Manu-lifestyle Scheme HSBC Super Trust Scheme Performance as at October Interest FundGuaranteed Fund Since Launch (%)

Christy43 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme Manulife MPF Interest Fund –fully hold in Hong Kong Bonds –interest rate is determined by the bond interest HSBC Guaranteed Fund –nearly 50% hold in equity –provide 0.25% interest rate per annually

Christy44 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme conservative medium-risk fund Manulife MPF Stable Fund vs. HSBC Balanced Fund –Provide capital growth

Christy45 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme Manu-lifestyle Scheme HSBC Super Trust Scheme Performance as at October Stable FundBalanced Fund Since Launch (%) HSBC invest more equity than Manulife

Christy46 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme Manulife MPF Stable Fund –mainly in bonds –with an interest guarantee upon the occurrence of certain pre-determined events HSBC Balanced Fund –Assets Portfolio mainly in equity –No interest guarantee

Christy47 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme Compare the Aggressive high-risk fund –Manulife Growth Fund Aggressive Fund –HSBC Growth Fund Hang Seng Index Tracking Fund

Christy48 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme Manu-lifestyle Scheme HSBC Super Trust Scheme Performance as at October Growth Fund Since Launch (%)

Christy49 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme Growth Funds helped to maximize the investment return mainly in equity

Christy50 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme Manulife Aggressive Fund vs. HSBC Hang Seng Index Tracking Fund Provide long term capital growth

Christy51 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme Manu-lifestyle Scheme HSBC Super Trust Scheme Performance as at October Aggressive FundHang Seng Tracking Fund Since Launch (%) Better Performance of Hang Seng Index in recent year

Christy52 Manu-lifestyle Scheme vs. HSBC Super Trust Scheme Manulife MPF Aggressive Fund –a unitized equity fund –mainly in equities and equity-related investments. Hang Seng Index Tracking Fund –Invest in Hang Seng Index –the performance of the Hang Seng Index

Carrie53 Manulife Global Select Scheme vs. HSBC Super Trust Plus Scheme

Carrie54 Manulife Global Select Scheme vs. HSBC Super Trust Plus Scheme –provided to a greater investment knowledge and experience investor –offers a choice of investment expertise –extensive range of funds

Carrie55 Manulife Global Select Scheme vs. HSBC Super Trust Plus Scheme Compare the conservative low-risk fund Manulife Global Select Scheme Performance since launch as at October (%) HSBC Super Trust Plus Scheme Performance since launch as at October (%) Interest Fund1.65Guaranteed Fund0.4 Capital Preservation Fund 5.78Capital Preservation Fund 15 Hong Kong Bond Fund International Bond Fund 23.81

Carrie56 Manulife Global Select Scheme vs. HSBC Super Trust Plus Scheme Different Asset Portfolio Manulife have more funds than HSBC

Carrie57 Manulife Global Select Scheme vs. HSBC Super Trust Plus Scheme Compare the conservative medium-risk fund Manulife Global Select Scheme Performance since launch as at October (%) HSBC Super Trust Plus Scheme Performance since launch as at October (%) Stable Fund16.75Balanced Fund32 North American Equity Fund -9.15Stable Growth Fund 30.2 European Equity Fund International Equity Fund 8.36

Carrie58 Manulife Global Select Scheme vs. HSBC Super Trust Plus Scheme Negative return in two Manulife funds –Significant loss in Asset Portfolio in North American and European Difference in return –Manulife mainly hold bonds –HSBC hold nearly 50% in equtiy

59 Manulife Global Select Scheme vs. HSBC Super Trust Plus Scheme Compare the Aggressive high-risk fund Manulife Global Select Scheme Performance since launch as at October (%) HSBC Super Trust Plus Scheme Performance since launch as at October (%) Fidelity stable Growth Fund(Launch at Sept ) 35.21Asian Equity Fund103.8 Growth Fund34.22European Equity Fund26.8 Hong Kong Equity Fund39.04Growth Fund32.1 Japan Equity Fund27.92Hang Seng Index Tracking Fund 41.1 Pacific Asia Equity Fund56.34Hong Kong Equity Fund47.2 Fidelity Growth Fund(Launch at Sept ) 59.72North American Equity Fund Aggressive Fund33.18 China Value Fund(Launch at Feb ) 21.5

Carrie60 Manulife Global Select Scheme vs. HSBC Super Trust Plus Scheme Negative return in HSBC funds –Significant loss in Asset Portfolio in North American Significant return in HSBC Asian equity –Include in invest in China equity Manulife provide a stable positive return

Carrie61 III. Comparison between the MPF Scheme of HSBC and Manulife Conclusion –Manulife Global Select Scheme and HSBC Super Trust Plus MPF Scheme are similar. –Manulife have provided six more funds than HSBC –Manulife performance is on average

Carrie62 III. Comparison between the MPF Services of HSBC and Manulife Compare these additional services of the Manulife and HSBC in the following aspects: –Hotlines –Website

Carrie63 III. Comparison between the MPF Services of HSBC and Manulife –Seminars –Newsletters –Regular benefit statements –Other Services

Carrie64 III. Comparison between the MPF Services of HSBC and Manulife Compare these additional services of the Manulife and HSBC in the following aspects: –Manulife provides a wider range services –electronic services

Carrie65 IV. Comments on MPF services The ultimate goal ensuring people are adequately provided for upon reaching retirement age.

Carrie66 IV. Comments on MPF services the choice of the MPF provider Chose by employer employee can only make the changes in the investment portfolio

Carrie67 IV. Comments on MPF services MPF Scheme Authority –consider what purpose they want to be in the MPF Scheme

68 THE END

69 Q & A