Henry Fan, the disgraced managing director of Citic Pacific and chairman of the Hong Kong Mandatory Provident Fund Authority, will see his current term with the MPFA come to an end on March 16.
His contract with the MPFA was not renewed due to ongoing investigations by the Securities & Futures Commission (SFC) over dealings involving Fan's family and Larry Yung, chairman of Citic Pacific. The scandal was first brought to light in October 2008 when the company told investors about a $2.4 billion loss from betting on the wrong side of the Australian dollar.
Anna Wu, a current member of the policymaking body, the Executive Council of the Hong Kong Government, will replace Fan as the new chairman of the authority on March 17. She was previously a long-time non-executive director of the MPFA between the system's setup in 1998 until 2005.
Wu's appointment will be welcomed by the MPF industry in Hong Kong. Unlike her predecessor, who was known for broad pictures and ideas, Wu is expected to bring to bear her legal and political experience gained from years spent serving on the board of the SFC and the Legislative Council before being appointed to the cabinet.
Previously, she also served as a chairwoman of the Equal Opportunities Commission, Consumer Council, Operations Review Committee of the Independent Commission Against Corruption; and was a member of the Hospital Authority and a non-executive director of the Hong Kong Mortgage Corporation.
Wu has been a practicing lawyer and an honorary fellow of the Centre for Comparative & Public Law and honorary lecturer of the Department of Professional Legal Education of the University of Hong Kong
Most fund executives agree that Fan's initiatives to bring about reforms such as employee choice, fee cuts and better transparency through heavy disclosure requirements were good-intentioned. However, many took offence at the offhanded way in which Fan announced changes without fully consulting the industry.
Employee choice -- whereby companies allow their employees to choose an MPF portfolio -- will become Fan's main legacy to the Hong Kong MPF system. This was all the rage last year, but since the post-Lehman global market meltdown, the public has put the issue on the back-burner. The proposal is still being churned through the Legislative Council system.
Donald Tsang's choice of appointing an old-hand to MPFA's chair says a lot about his intention to restore stability and confidence in the pension system. But few in the industry know or would comment on what to expect from Wu once she steps up to the stage.
As of end-2008, total assets under management in MPF constituent funds amounted to HK$209.4 billion ($27 billion). The MPF system now provides retirement coverage to more than 2.44 million members of Hong Kong's 7 million population.