Consolidation beckons as providers count cost of MPF

The Mandatory Provident Fund (MPF) has experienced all the problems usually associated with such a large-scale government policy initiative - systems failures, bureaucratic confusion and a reluctance on the part of employers to comply. To compound these difficulties, the slump in equity markets meant that for many investors their first experience of the MPF was a sobering one. For those players committed to the game, acquisitions look like the best way to build market share. While smaller companies that are not happy with their service providers are already switching, life is more complicated for bigger firms. They went through a lot of pain to get their MPF providers in place back in 2000 and they are reluctant to dismantle their administrative systems. Instead of switching, some are offering a second service provider. But in the next year or so they will begin reviewing their service providers. When that happens, big changes are expected. The leading providers are already planning their marketing strategy for 2003.