In times of stress, Ayesha Macpherson Lau turns to the pages of fiction novels, plucking herself out of the present and into far-flung places. She recently re-read her favourite, The Count of Monte Cristo. “I always remember the main character’s remark to his mentee: ʻAll human wisdom is contained in these two words: Wait and hope.’ I like that because that’s exactly what I need. I need to learn to be more patient.”
Patience is probably one thing required to conduct the biggest reform of Hong Kong’s Mandatory Provident Fund (MPF) System, which is what Lau, a member of the Hong Kong Institute of CPAs, is currently focused on as Chairman of both the Mandatory Provident Fund Schemes Authority (MPFA) and the Board of Directors of the eMPF Platform Company, the MPFA’s wholly owned subsidiary tasked to operate the digital platform upon its launch in 2024.
The MPF System was established in 2000 to provide basic retirement protection for the working population of Hong Kong. Before its implementation, only about one-third of Hong Kong’s workforce had some form of retirement protection. Today, according to the MPFA, the employed population in Hong Kong is almost fully covered by retirement schemes. As at the end of January 2023, total MPF assets amounted to HK$1,120 billion. “This is a very significant pool of resources that the working population can depend upon for their retirement, and it should be treasured by everyone in Hong Kong,” says Lau.
Lau, who was reappointed MPFA Chairman in March, points out that the MPF System is still relatively young. “International experience tells us that building a mature retirement protection system can take up to 40 years, so the MPF System is about midway through this journey,” she says. “We are like a youngster going through some growing pains right now, and in order to deal with that, we are working on the most important reform project ever introduced to the MPF, which is the eMPF Platform project.”
“We are like a youngster going through some growing pains right now, and in order to deal with that, we are working on the most important reform project ever introduced to the MPF.”
The eMPF Platform is a major digital transformation project. Through standardizing, streamlining and automating the administration processes of MPF schemes, the eMPF Platform will provide a highly efficient, low-cost user experience for all scheme members and employers, says Lau. “This is going to provide a totally new MPF ecosystem with the eMPF Platform taking over the administration work that is currently being handled by 13 trustees using different systems. It’s all going to be centralized onto this platform,” she says, adding that users, including 4.7 million scheme members, will be able to easily access and manage their MPF accounts – including switching funds and schemes – via a mobile app or computer. “Another thing is cost savings, which will be directly passed on to the scheme members through trustees’ reduction in administration fees, and this is protected by legislation.” With the introduction of the eMPF Platform, a cumulative administration cost savings of HK$30 to HK$40 billion is expected over a 10-year period after the platform is fully operational.
Lau is aware that difficulties often emerge when integrating new FinTech solutions into legacy systems. She regretfully notes that MPFA’s contractor reported a very likely delay of eight months in the project due to staff shortage and turnover. “Our plan is to start an orderly transition by trustees in sequence starting in 2024. The target of the platform being fully operational in 2025 remains unchanged.”
While being complex, the project is also groundbreaking on a global level, according to Lau. She notes that the eMPF Platform is a pioneer globally when it comes to comprehensive scheme administration system for privately managed pension schemes. “We must make this a great success because not only will it bring a lot of benefits to Hong Kong stakeholders, but internationally it will put us right up there in terms of retirement systems.” Lau adds that overwhelming positive feedback has been received when the vision and development of the project were shared by the MPFA with peer regulators from around the world.
Previously managing partner of KPMG China in Hong Kong, Lau believes her background as a CPA has equipped her to handle the pressure and drive the project to completion. “In a CPA firm, we deal with a lot of large-scale projects that involve a large number of team members, many countries, and take months, if not years, to do. It’s a very similar experience,” she says.
With people in Hong Kong living longer than ever, and the increasingly volatile financial markets, the MPF System faces the challenge of ensuring scheme members receive a sustainable level of retirement income. Lau points out that MPF investment returns were particularly affected by the heightened market volatility last year. “A lot of it is invested in equities and bonds. And last year, for the first time ever, prices of equities and prices of bonds fell at the same time. With these macroeconomic developments, our scheme members have a stronger desire for MPF funds that would offer them more stable returns.”
In his Budget Speech in February, the Hong Kong Financial Secretary tasked the MPFA and the Hong Kong Monetary Authority to jointly conduct a study in order to propose MPF funds that would offer stable returns with low fees. The Financial Secretary also plans to earmark a certain proportion of future issuances of government green bonds and infrastructure bonds for priority investment by MPF funds, providing scheme members with an additional option of stable investment. “We welcome the proposed initiative, which is expected to further diversify MPF investment opportunities,” says Lau. Increasing MPF product choices, she adds, is one of the most effective approaches to counter market volatility.
Another important way to increase investment stability, is incorporating environmental, social and governance (ESG) factors into investment risk management, she says. “ESG is very important to MPF funds. The impact of ESG risks are often long term, and that’s exactly what an MPF investment is – long term,” says Lau. “The investment horizon of MPF funds stretches over several decades, making them vulnerable to long-term investment risks.
Therefore, the MPFA is driving the development of sustainable investing practices for MPF funds to mitigate ESG risks and protect scheme members’ interests. We need to have a framework or policy to make sure that MPF investments can manage these risks properly.”
The MPFA is a member of the Green and Sustainable Finance Cross-Agency Steering Group, in which the financial regulators in Hong Kong examine policy and regulatory issues in green and sustainable finance, particularly those that may have a cross-sectoral impact. “I think a cross-agency approach is good for Hong Kong because what you don’t want is each regulator coming up with its own ESG policy,” says Lau.
Lau’s decision to pursue an accounting career – and a sense of individuality – is partly thanks to her twin sister. “When my sister learned that I wanted to be a lawyer, she declared she wanted to be a lawyer too. If you are a twin, the last thing you want growing up is doing the same thing as your twin because everything so far has been the same for both of you.”
She had other, “more rational” reasons. Firstly, she knew the profession would offer her career stability and variety. She believed that being an accountant would offer her a strong foundation for whatever she decided to do in the future. “Everybody needs an accountant. The variety side comes from the fact that all businesses or industries need an accountant, and particularly for professional accountants in practice, it’s like working in many different companies at the same time.”
She was also drawn by how accountants are synonymous with integrity. “For example, as an auditor, you are paid to independently check and give an opinion on whether the accounts of a company are true and fair. You are paid to basically express your own honest opinion.”
Lastly, she was attracted to the international aspect of the accounting profession, which she says is evident in a global financial centre like Hong Kong. “We might be providing the same service to, say, a Chinese client and an American client, but the way we go about it would be different because we need to respect and be sensitive to cultural differences and the different business practices. I think this need to tailor to a client’s cultural preferences makes the work more challenging, but also more interesting,” she adds.
After graduating with a degree in History from University College London, Lau joined KPMG in London as an auditor. “When I joined the profession to become a trainee, at least 60 percent of the graduates who were hired by accounting firms in the United Kingdom did not have an accountancy degree,” she recalls, citing the vast variety of backgrounds her colleagues and herself hailed from. She also remembers her time as a trainee being filled with intense jampacked days of client work and studying for the professional exams.
She eventually moved back to Hong Kong in 1993, becoming an Institute member that same year, then worked her way up to managing partner of KPMG in Hong Kong. She left the firm in September 2021 following her appointment as MPFA Chairman. Lau says the leadership techniques she developed and exercised at the firm have been equally useful in the pension industry. “The leadership qualities needed are very similar whether you are in a large CPA firm or a public organization. Firstly, a good leader will be able to see the strengths in each team member, and then assign work or plan work to suit the strengths of those people, and make sure that the team members will work well together,” she says.
Lau also stresses the importance of leaders listening to different views and ideas, and using the information for making the right decision. “Once you make that decision, you need to be very clear and open about your logic because you need the buy-in of the team. They can only carry out your decision when they understand your thinking,” she adds.
“I believe that you shouldn’t criticize people for failing to do something if you are not able to do it yourself. If I want to convince people to do something, I should do it first.”
“Another thing which I find it the same, whether at KPMG or MPFA, is the importance of leading by example. I believe that you shouldn’t criticize people for failing to do something if you are not able to do it yourself. If I want to convince people to do something, I should do it first. It can be as simple as showing respect by being on time for meetings.”
After three years of doing audit work, Lau chose to specialize in tax. A few aspects of the specialization were compelling to her, such as its immediate and future impact. “It’s about helping businesses and senior management to strategize and plan for the future. I find that very rewarding and I feel appreciated because tax is a cost, so the value of your service is very immediate,” she says.
“The other thing is, because tax planning is usually the responsibility of the top management of the client, you’re privy to a lot of confidential information about their future business plans. This also means that you get to interact with senior-level people in your client’s organization, which is very unique and valuable for a young professional.” Taxation is also where her interests in accounting and law merge, she adds.
Lau became a regular speaker and writer on tax matters, and had also been active member of the Institute’s former Taxation Committee since 2003 and became the chairman from 2009 to 2011; she continued as a member of the renamed Taxation Faculty Executive Committee in 2012 and served as convenor of the Taxation Faculty Subcommittee. She says that working with “many intelligent and kind people” made her time at the committee rewarding. “We worked together on many technical issues, not just related to the Hong Kong tax system but on an international tax level, particularly as the Organization for Economic Co-operation and Development has been driving a lot of reforms. There was also a lot of experience-sharing, for example in terms of how to run a professional firm.”
The committee, she notes, is an example of how the Institute empowers its members to contribute to the wider community. Lau looks back on how she was able to play a key role in developing the Institute’s budget proposals to the government. “The Institute has always spent a lot of time and effort into formulating well-thought through, practical recommendations to the Financial Secretary.”
Lau was also able to give back to society as a member of the Institute’s former Community Services Committee from 2003 to 2005, and then as deputy chairman from 2006 to 2007. “I have met Institute members who are very willing to contribute to society; who unselfishly contribute to society,” she says.
Lau says she’s a proud Institute member. “Accounting is a pillar of the Hong Kong economy. And also, our members have branched out into all walks of life, including being appointed by the government to many advisory and statutory bodies,” she says, adding that some members are also advising the Mainland government, and representing Hong Kong in international bodies. “In that sense, the Institute and its members make a huge contribution to Hong Kong as an international financial centre.”
Lau says she looks forward to celebrating the Institute’s 50th anniversary this year. In terms of how the profession has evolved over the years amid increasing competition in the corporate world, Lau points out that CPAs have been moving into a wider range of specializations and providing higher-value services to their clients. “Mainly in the last two decades, the profession has really branched out into more specializations – Look at the different specialized areas of consultancy that our members are now involved in. I think new specializations will keep coming up,” she says.
“Focus on an area of specialization and aim to be a recognized expert in that field, but at the same time, invest time in general knowledge.”
Based on this, Lau shares her key piece of advice for young accountants: “In this increasingly complex world, I believe that a really good CPA is a specialist as well as a generalist. Focus on an area of specialization and aim to be a recognized expert in that field, but at the same time, invest time in general knowledge because the more senior you are, the more important it is to be able to hold conversations on any topic.”
Lau believes her CPA experience, and the job security that came with it, was a big enabler in her having the capacity and opportunities to do meaningful work for the city and its people, including her current role. As MPFA Chairman, one of her key aims is to build a retirement savings system that is valued by the Hong Kong people, in particular, the grassroots and low-income employees.
“A key aspect of our work is reaching out to our stakeholders including grassroots stakeholders. After all, the MPF System is a social system, so I believe that the most important thing is to make sure that we can cater to the grassroots scheme members. Because for them, the MPF may be their most important, or in some cases, their only retirement savings. So if we get that right, we are done,” Lau says.
Time and time again, Lau has demonstrated her passion to serve the public throughout her career. When asked what has fuelled this passion, Lau points to the many CPAs – throughout the Institute’s half-century-long history – who have made a difference in society. “It’s because of my predecessors or my senior CPAs, and looking at them,” she says. “They have all set a very good example for me.”
The eMPF Platform, which is under development, will standardize, streamline and automate the administration processes of MPF schemes. A cumulative administration cost savings of HK$30 to HK$40 billion is expected over a 10-year period after the platform is fully operational.