Before the Employee Choice Arrangement: how employers and employees should prepare

Adapted from a report published in March 2012.

The Employee Choice Arrangement — the reform nicknamed MPF “semi-portability” — was expected later in 2012, and it promised to let employees direct part of their contributions to a trustee of their own choosing. Whether you signed the pay cheques or received them, the message in March 2012 was the same: start preparing now.

What was the Employee Choice Arrangement?

The Employee Choice Arrangement, nicknamed MPF “semi-portability”, would let employees choose their own MPF provider and scheme, and transfer the accrued benefits derived from their current-employment employee contributions into the new scheme. It was designed to give employees far greater say over their retirement savings, ending the era when the employer chose everything.

How should employers prepare?

Employers should start by reviewing their existing scheme — fund performance, fees and service standards — and, just as importantly, listen to what staff think of it. From there they could decide how to improve the offering or bring in a new provider to widen choice. Even then, some SMEs and large corporations were studying the arrangement as a way to burnish retirement benefits and staff morale.

How should employees prepare?

Even before they could actually switch, employees should start comparing schemes’ features, fund ranges and service quality — and, above all, get clear on their own needs by setting retirement goals and investment objectives. Anyone holding several preserved accounts from past job changes should also consolidate them now: pooling scattered accrued benefits into one chosen personal account is far more efficient to manage.

What three things matter when choosing a provider?

A proper comparison covers fund range, fee structure and support services — not just one of them.