Employee Choice Arrangement: the industry’s readiness in 2011

A short wire item from 21 December 2011 captured the industry’s mood at the MPF Forum 2011: systems were ready, fees could fall further, and early withdrawal on terminal illness was welcome. Eleven months before “semi-portability” launched, the tone was cautiously optimistic — and history largely bore that optimism out.

How ready was the Employee Choice Arrangement in 2011?

At the December 2011 MPF forum, Bank Consortium Trust’s managing director said the industry’s systems for handling “semi-portability” fund transfers were largely ready. The MPFA was also running regular system tests, and no chaos was expected at launch — the market’s biggest worry being whether the annual switching wave would overwhelm trustees’ computer systems.

Other voices at the forum

At the same event, AIA’s senior vice president expected fees to fall after the arrangement launched, bringing healthy competition to the industry. On the MPFA’s concurrent early-withdrawal consultation, she welcomed letting critically (terminally) ill members withdraw early, but asked the government for clear guidelines and careful handling of potential abuse. She also judged that while asset movement would increase, no major industry consolidation would occur within five years.

What followed

The Employee Choice Arrangement launched on schedule on 1 November 2012, with first-year switching running broadly smoothly — the feared system chaos never materialised. On fees, the price war that began in 2011 continued after launch, with ever more low-fee products — just the “healthy competition” predicted at the time. This snippet’s era value is the snapshot it preserves of the industry’s mindset on the eve of a major reform: ready, but unsure how the fee war would end. See the MPF education guides for how the transfer regime works.