Employee Choice Arrangement: 65% hazy on details; don’t choose on fees alone

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

The November 2012 Employee Choice Arrangement was coming, yet a survey found 65% of employees unclear on its details and 51% not planning to move contributions — mainly fearing hassle. A local MPF consultancy commissioned the HKU Public Opinion Programme to phone about 1,000 contributing employees aged 18-plus; the findings bore thought.

What did workers get wrong?

Only 11% planned to move contributions; 51% wouldn’t: 29% feared hassle, 20% were satisfied as-is, 16% didn’t understand.

What mattered in choosing a scheme?

33% ranked fees top, 22% their own risk appetite, 21% trustee track record. On MPF securing retirement, 56% lacked confidence; overall confidence averaged 3.7 — a fail.

The expert warning: look beyond fees

The chief executive of a local MPF consultancy said the survey showed widespread misunderstanding and unimproved negativity toward MPF. Average fees then ran 1.73%; post-choice competition should lower them — but choosing on fees alone misses investment performance.

She also warned some trustees would dangle cash rebates or opening fee discounts to win switchers, but perks might not last; employees had to study choices carefully.

From November, 2.3 million employees got one chance a year to move the employee-contribution portion to a chosen trustee and scheme; the MPFA promised heavier publicity.