Are MPF Guaranteed Funds Really 100% Guaranteed?

What strings attach to guaranteed funds?

A 2011 MPFA column explained: guaranteed funds are not 100% guaranteed — most carry precondition clauses, most commonly a lock-in period; switching funds or plans mid-way can void the guarantee. Some impose strict withdrawal conditions: benefits only at 65, early retirement, death or total incapacity; some let trustees adjust or even cancel the guaranteed return rate on notice.

Why are the fees higher?

Guaranteed funds charge extra guarantee or reserve fees on top of basic charges, so they generally cost more than other funds. They mainly hold bonds, equities or short-term money-market instruments — low risk, suiting low-risk-tolerance or near-retirement members willing to honour the terms until retirement. Compare fees at MPF fund comparison.

What must you do before choosing?

Read the offering document or fund fact sheet for the guarantee details; ask the trustee if unsure, or call the MPFA hotline 2918 0102.