Gearing up for MPF semi-portability: providers roll out free fund-comparison platforms

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

With MPF semi-portability expected in November 2012, workers would soon be able to move the employee-contribution portion to providers of their choice. Hong Kong providers and intermediaries were already preparing: some built fund-performance platforms, others stepped up education.

What should workers know before semi-portability?

A pensions group managing director said the clearest effect would be more competition, but fees shouldn’t top the checklist — fund performance mattered most. A pricier fund that still outperformed after fees was worth choosing; a cheap but poor performer was not. Average MPF fees then ran about 1.7 per cent. She noted providers each excelled in different fund categories — none did everything well — so investors had to choose case by case.

Do fund switches execute at live prices?

No. A financial services executive said many assumed online switches traded instantly at current prices, when the switch price was actually the unit price one to two business days later — a sign of how shallow public fund knowledge was, and why her firm was pushing education, even sending promotional vans into neighbourhoods.

Where were the free comparison tools?

The MPFA’s platform showed fees but not performance; one provider had set up a free platform with performance data and comparisons, and planned new MPF products before the launch. Employers were watching too: one firm offered employer clients an online platform comparing ORSO and MPF performance to help them choose — since forfeited ORSO benefits of short-tenure leavers belonged to employers, they wanted to choose wisely.

One reminder: under the Employee Choice Arrangement, members could switch providers only once a year — choose wrong, and there was no redo for 12 months.