Employers need not worry: the Employee Choice Arrangement barely touches contribution admin

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

Hong Kong’s SME bosses usually juggle everything from business development to payroll themselves, and many feared “semi-portability” would pile on admin work. But an AXA agency sales executive argued the Employee Choice Arrangement would barely affect employers’ existing contribution administration.

Why shouldn’t employers worry?

The arrangement only lets employees move the accrued benefits from their own mandatory contributions once a year to a scheme of their choice; the scheme for the current contribution account — covering both employer and employee portions — remains the employer’s choice. In other words, whatever employees do with their own portion, employers keep paying both portions into their chosen scheme and keep enrolling new hires in it.

Could employer contributions be moved away?

No — the employer portion had to stay in the contribution account of the employer’s chosen scheme. The arrangement therefore did not affect how employers handled contributions, employee departures, or offsetting severance and long-service payments.

How ready were the trustees?

Even if employees moved their own portion every year, employer admin would not grow. Trustees said they were ready: upgraded computer systems, extra staff, employee training, stronger education and publicity, and wider client communication channels to handle transfer instructions efficiently. The transfer process resembled the existing preserved-account consolidation, mainly involving coordination between trustees — so employers needed no extra resources.