MPF affects the security of post-retirement life of each and every one of us who is in the Hong Kong workforce. It is therefore necessary for us to look into our holdings and review the portfolio of our MPF investment every six months or a year. In addition to reading the annual benefits statements sent to us from the trustees of our funds, the following three easy tips will help us better manage our MPF.

1. Compare funds

When you change jobs, do not make the mistake of leaving the MPF from your previous jobs unattended. This will result in multiple personal accounts, which not only make managing them difficult, but may even affect your overall investment strategy. You might consider moving the accrued benefits from old MPFs accounts into the contribution account set up by your employees, or transferring them to a personal account in an MPF scheme of your choice. At the same time, you should take the opportunity to understand and compare such things as the performance and the charges of various funds so that you choose one that best suits you.

2. Make the best use of Employee Choice Arrangement (ECA)

MPFA put in place the Employee Choice Arrangement about four years ago, making it possible for members to take active measures to manage their MPF and giving them a higher degree of control over their retirement. By ECA, an employee can choose to transfer the employee’s mandatory contribution portion of his MPF and the benefits derived from it to an MPF scheme that he or she chooses.

One should know, however, that after an employee takes advantage of ECA, the employer will continue to make monthly contributions, including the employer’s and the employee’s portion, into the original MPF scheme.

3. Under the working of Default Investment Strategy (DIS)

Default Investment Strategy was launched by MPFA on 1 April, 2017.  People who do not have the time or are not inclined to manage their MPF might do well to know about this investment strategy.

DIS is made up of two constituent funds (the Core Accumulation Fund and the Age 65 Plus Fund).  According to the age of the member, the allocation of the funds is adjusted to lower the risk exposure as the member approaches retirement age. It invests in different assets globally, such as equities, bonds and money market instruments. The other characteristic of DIS is its relatively low fees. The overall charge is capped at 0.95%, to be broken into a cap of 0.75% for management fees and 0.2% for recurrent out-of-pocket expenses.

Currently, with the exception of members who are 60 of age or over by 1 April, MPF accounts with no explicit investment instructions from members will be automatically invested in DIS. Other members might choose to opt for DIS in the future.

Members should note that DIS is not a capital preservation strategy, and does not guarantee the repayment of capital or positive investment return. Members should consider risk factors such as market fluctuations before making use of DIS.