Towers Watson: Do you think ECA is a good arrangement for MPF?

五月 6, 2011
Joe Chan

The most notable development of the MPF is ECA despite its deferral. It sounds interesting, but is it really a good thing for society? Let’s hear what the market players’ think:-


Desmond Ng, Chief Operating Officer, Asia ex Japan, “Under the ECA, employees may, on a lumpsum basis, transfer the balance arising from his own contributions to a personal account in an MPF scheme of his choice, once a year. The scheme aims to empower employees with more control over their MPF contributions.


However, employees should bear in mind that they should do a thorough review of the available services to start with; pick one that they like and stick to that service provider, regardless of how he or she changes employment. If not, members will have a pool of MPF accounts each with a relatively small sum.”


Kelvin Lee, Head of Institutional Business, “We think it is a good thing for members to have the flexibility to choose MPF providers; however, regulators do have the responsibility to ensure proper guidelines are in place to avoid miss-selling to members.”


KP Luk, Head of Institutional Business, “We support the enactment of ECA. (1) it allows employees to transfer accrued benefits derived from employee’s mandatory contributions to a scheme of their own choice at least once per calendar year in a lump sum. So employees would have more control on their end. (2) the arrangement enables 60% of the MPF benefits to be transferrable among trustees, thereby promoting market competition. MPFA expects that there will be more competition and hence would like to see fees being reduced.”


Elvin Yu, Head of Business, Hong Kong and China, “As the MPF scheme has started to mature, and members have become ever more sensitive to the performance differential between top performing funds and less well performing funds, employers have been unable to respond effectively to members who would like to exercise greater choice – simply changing provider may not on all occasions provide sufficient choice that is expected by all members.


As a result, under ECA members can facilitate greater choice by moving their accumulated mandatory contributions to any other scheme in the market in much the same way they manage their existing personal accounts (previously known as preserved accounts) at least once every year.”


Stanley Yip, CEO, “With ECA, MPF members will be given more choices in selecting their own MPF service providers. This will help to increase the involvement of members and thus raise the awareness in retirement planning and retirement investment. MPF market will become more competitive especially in the areas of pricing, servicing and product range, which will in turn benefit the members.


If members were given more control over their MPF accounts, it would encourage more active participation among members in managing their MPF investments. ECA acts as a transitional learning period while waiting for members to gain full understanding in retirement investments.”


Bonnie Tse, Senior Vice President and Managing Director, “The implementation of the ECA allows employees to have a say on selecting their MPF service provider. The market dynamic will change from a pure employer-driven to both employee and employer-driven market. The competition generated is expected to have positive impact on the development of MPF market, which will ultimately benefit the employers and members.


It is foreseeable that:

The competition will encourage service providers to upgrade their services.

More fund choices will be available.

Enhancement in e-Services to provide more convenient and easy way for members to manage their MPF investments.”


Alan Tsang, CEO, “強積金始終是成員自身的權益,所以他們應有自主及自控權利,ECA 更能令成員作出適當的選擇。”


Benjamin Li, Chief of Pension and Broker Channel, “Absolutely. Offering a choice for members is always good to the market. I think the Member’s Choice will promote the growth of the MPF industry, and the interest and awareness of MPF among the Hong Kong labour force.


As the members understand more about retirement planning, they would realise that mandatory savings are insufficient. We foresee a progressive trend that people shall adjust their contribution to a higher level.”


Patrick Li, Chief Executive, “ECA is a good arrangement for members. Members would have more choices on choosing MPF service providers, since they can make their decisions with no employers’ consent needed. However, it poses some challenges for members: the illusion of choice, the reality of increased costs, and the potential for disappointment. We take a positive view towards ECA and have measures in place to help members overcome these challenges.


For the MPF service providers, ECA is a great arrangement for them. This stands to make more fee income from those who transfer in, and can provide more funds or schemes, better products and services under competition.


From the regulator’s point of view, it is a positive measure which has progressed and enhanced the MPF system. It is also great for employers, who now have slightly less responsibility and accountability for their employees’ MPF experience.”


Wilsome Chow, CEO, “ ECA is certainly good for members in terms of providing flexibility for their own retirement planning. However, it should be noted that ECA involves not only members but also MPF providers, intermediaries and MPFA. A good co-ordination among all parties is a prerequisite to give a good start and enhance smooth implementation.”

Sun Life Financial

Billy Wong, Vice President, “Yes, this gives more flexibility to members although we believe higher flexibility (e.g. allowing members to transfer employer contributions during employment) could be considered.”


This article is not intended to provide investment advice. Action should not be taken on the basis of any opinion, view or statement contained in this article without seeking specific advice. Towers Watson neither endorse nor are responsible for the accuracy or reliability of any opinion, view or statement made in this article, and under no circumstances will Towers Watson be liable for any loss or damage caused by any reliance thereof.