Employee Choice Arrangement: How Hong Kong’s MPF “Semi-Portability” Works

Rewritten from reporting published in April 2012.

“Semi-portability” was the buzzword of 2012, yet many employees were hazy on the details: what exactly could be moved, what could not, and how often. This Q&A sets out the Employee Choice Arrangement in full.

What Is the Employee Choice Arrangement?

The Employee Choice Arrangement — commonly called MPF “semi-portability” — lets an employee transfer, once per calendar year, the accrued benefits derived from the employee’s own mandatory contributions in the current contribution account, in a lump sum, to a trustee and scheme of the employee’s choice. A milestone for the MPF system since its 2000 launch, it was expected to take effect in November 2012, subject to LegCo passing the bill tightening regulation of MPF intermediaries.

How Does the Once-a-Calendar-Year Rule Work?

“Once per calendar year” means the transfer right can be exercised once within 1 January to 31 December each year — not that 12 months must separate two transfers. For example, an employee who transfers in November 2012 uses the 2012 right and can exercise the 2013 right as early as January 2013, without waiting until December 2013.

Which Accrued Benefits Can Be Transferred?

The employer’s contribution portion in the current contribution account cannot be transferred. However, benefits from past employment or self-employment that the employee previously moved into the current contribution account can be transferred in a lump sum at any time, free of the once-a-year limit.

Why Was the Arrangement Introduced?

It was designed to give more than 2.5 million employees greater choice, encourage them to manage their MPF investments more actively, and sharpen market competition so that MPF fees would have room to fall further. The government and the MPFA believed intermediaries should first be brought under statutory regulation, to protect employees and the self-employed.

More background on how the system works is available in the MPF education guides.