Employee Choice Arrangement: November transfer rules — once a year, six to eight weeks

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

When the Employee Choice Arrangement took effect in November 2012, only about one in ten employees was expected to switch MPF administrators. Transfers were limited to once a year and took six to eight weeks — the rules, as the English press set them out then, matched the Chinese-language account.

What were the transfer rules?

• One transfer per year; post-transfer contributions stayed in the original account, to be moved again the following year.
• An electronic platform launched on 1 November to speed client-data transfers between trustees.
• Transfers took six to eight weeks; trustees had to contact clients within six to eight weeks if application forms had errors, per MPFA guidance.
• Mandatory contributions from former employment could move at any time, outside the annual limit.
• The employer portion had to stay in the original scheme; employers’ administration was untouched.

How big was the switching wave?

The MPFA’s executive director (supervision) noted employees averaged two accounts, some a dozen. The authority would proactively contact multi-account holders and suggest merging. An MPFA senior manager added the hotline handled general enquiries, but scheme specifics were best put to trustees directly.

Was ten per cent a lot?

By Australia’s experience, ten per cent was normal. The MPFA wasn’t worried about multiple accounts — post-transfer holdings would only consolidate over time. The market’s bigger question then: would the switching wave truly deliver fee cuts? That one needed time to answer.