Don’t switch MPF just to switch: transfers took 5–6 weeks, mind the exit risk

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

With semi-free choice imminent, many were eager to switch. But as an asset manager’s institutional business head warned at the time: being able to switch is not a reason to switch — especially when many members barely understood the transfer process.

How did the transfer process work?

An employee unhappy with current MPF performance filled in a transfer form for the new trustee. The new trustee checked it and passed it to the former trustee, which verified the details, redeemed fund units and transferred the cash; only then could the new trustee allocate it to constituent funds per the employee’s instructions.

The whole process took about five to six weeks. Market swings during that window would affect the price at which assets entered the new scheme’s funds — the exit risk couldn’t be ignored.

Retirement investing is not catching a flight

Retirement investing, the author wrote, is not like catching a flight — it’s a long-term, disciplined, dollar-cost-averaging plan. Beyond the risks above, employees should weigh the provider’s background, fund suitability and service scope before exercising their choice.

Why stay calm even when markets rally?

Notably, the original opened with the market mood of the day: the ECB’s unlimited buying of 1–3 year bonds and two straight days of trillion-yuan mainland infrastructure approvals fuelled rescue hopes, lifting Hong Kong and Asia-Pacific stocks. Yet the author cautioned that fundamentals remained weak and the rally might prove fleeting — a market bounce is no reason to switch blindly.