Employee Choice Arrangement companion reform: over 2.5 million MPF members to get stronger protection, intermediaries to be registered

In December 2011, the government announced that the Employee Choice Arrangement — MPF “semi-portability” letting employees choose their own MPF scheme — was targeted for 1 November 2012, alongside a bill to tighten regulation of MPF intermediaries and crack down on MPF default contributions. The bill was gazetted on 9 December 2011. The amendment was the key companion piece to semi-portability: with employees about to choose their own schemes, sales and promotion activity was bound to grow, so regulation had to come first.

Why was the 2011 amendment the key companion to the Employee Choice Arrangement?

With the Employee Choice Arrangement letting employees choose their own MPF scheme from 1 November 2012, the amendment created an intermediary registration regime run by the MPFA, banned unregistered intermediaries from selling or promoting MPF products under criminal sanction, and made it an offence for employers to ignore court orders to pay MPF default contributions — extending better protection to over 2.5 million members.

Three pillars of the reform

1. MPFA as registration authority: the MPFA would register MPF intermediaries, set conduct rules and impose disciplinary sanctions.
2. Criminal sanctions against unlicensed promotion: only registered intermediaries could sell or promote MPF products.
3. Court orders with teeth: employers who failed to pay MPF default contributions and surcharges as ordered by a court would commit an offence.

For members, the message was clear: once semi-portability arrived, anyone selling them an MPF product had to be a registered intermediary answerable to the MPFA. More background is available in the MPF education hub.