Don’t Switch MPF for Small Sweeteners

Don’t Switch MPF for Small Sweeteners

In January 2011, Fidelity’s Cheng Kim-wai told of a friend talked into staying with his MPF provider, prompting the question: was it cheaper, or were there perks? Her warning: don’t sacrifice returns for “small change”.

How do you know if you’re overpaying?

The MPFA website’s fee-comparison platform lets you stack your fund against peers. Compare like with like (equity vs equity) on the fund expense ratio — management plus operating plus admin — for the full picture. Guaranteed funds add guarantee fees, so their ratios run higher.

Fees or performance — which matters more?

Performance matters more. A cheap poor performer can leave you with less than a pricier strong one. But same-category fees can differ by 3.69 points — ignoring that costs you. Note: the MPFA bans providers from luring transfers with shopping perks (new accounts excepted).

How should you decide whether to switch?

Think long-term, compare properly, don’t act on impulse. Compare MPF funds first.