Employee Choice Nears; Adviser: Know What You’re Buying Before You Switch

The Employee Choice Arrangement (ECA) takes effect next month, and Towers Watson’s Hong Kong chief Tso Wai-pong told this site workers must do their homework before moving MPF: first, understand what funds they’re actually buying.

How should you prepare for the ECA?

Look at long-term performance and fund expense ratios — not just returns. Tso advised workers to study each fund’s long-term record and expense ratio before moving their own-contribution MPF to a new scheme. He urged reviewing portfolios for duplicated fund categories — “buying the same thing twice” — such as holding several funds all heavily weighted in Greater China equities, which concentrates risk.

What help does the MPFA offer?

The MPF Express website compares schemes and funds. To assist workers, the MPFA runs the “MPF Express” website with scheme and fund comparisons. Employers, meanwhile, should understand the new arrangement and their obligations before it starts to stay compliant.

What is the Employee Choice Arrangement?

Employees can move their own-contribution balances to a chosen trustee. The so-called “semi-portability” lets employees transfer accrued benefits from their own contributions to an MPF scheme of their choice; the employer-contribution portion stays in the original scheme. Before switching, compare the old and new schemes’ fund choices, fees and performance.

To compare charges and returns across MPF funds, visit MPF fund comparison.