Consolidating MPF accounts: why pre-retirees should merge early

This article is a rewrite of a report from July 2012.

Still holding several MPF accounts near retirement? MPF consolidation is not about tidiness — it is about money: more accounts mean more fees, and with withdrawal at 65, the arithmetic is unforgiving.

Why consolidate early?

The statutory withdrawal age is 65 — the further from retirement, the more fees you pay. Retire at or before 60 and withdraw after 65, and with no fresh contributions in between, the old money keeps compounding; keep accounts to three at most to avoid over-fragmentation, cut costs and stay manageable — fitting a retiree’s unhurried life.

What should you know about switching account types?

Fund switching is not scheme transfer. Adjusting the portfolio (fund switching) means watching dealing times — some trustees dealt at the day’s price on receipt of instructions. But moving money from trustee A to trustee B is a scheme transfer: identity checks, redemptions and deposits take nine to 12 working days before the new scheme’s balance shows.

What is the fastest way to switch?

Use the voice system or the internet. With correct details, same-day pricing was achievable; post was far slower. And remember MPF deals “forward-priced”: buy and redemption prices are struck after market close, typically published two business days later — the actual converted units only show on day three.