Full MPF portability still a distant prospect

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

With the Employee Choice Arrangement — the “semi-free choice” scheme — about to take effect, Hong Kong workers were asking an obvious question: when can they truly choose their own MPF trustee? The answer, according to market analysis at the time, was not soon. Full MPF portability faced two major obstacles, and the MPFA said setting up a central database needed “further in-depth study”.

Why was full MPF portability so hard to implement?

First, employers feared losing track of their contributions. Under the law then in force, employers could use their MPF contributions to offset employees’ long service payments. If workers could freely move trustees, employers would lose sight of where their contributions went. The MPFA said full portability would require a central database storing all scheme members’ account records, so employers could trace the accrued benefits from their contributions. But the authority conceded such a database would mean huge systemic change and enormous cost — it had only conducted a preliminary feasibility study.

Second, employers would have to pay into multiple trustees. If each employee chose their own trustee, employers could end up contributing to several trustees at once, piling on administration and confusion. Industry voices were candid: full portability was shelved precisely because it was too far-reaching, and even the compromise semi-free-choice version took years of twists before launch. Full portability, they believed, was at least three to five years away.

What did workers think of their MPF contributions?

A Towers Watson MPF survey at the time showed telling numbers:

The consensus that mandatory contributions fall short, coupled with reluctance to top up voluntarily, was already the defining tension of the system.