How Do MPF Funds Actually Work?

How do contributions become investments?

A March 2011 newspaper column explained: once your employer enrols you, you pick funds matching your goals and risk tolerance; each month your contributions plus your employer’s go via the trustee to the investment manager, buying fund units at market prices. Managers pool members’ money to scale up, investing per each fund’s objectives and policy in equities, bonds or deposits, with members allocated units proportionally — strength in numbers means more choice and better diversification.

What if you never choose a fund?

Every scheme has a default fund where contributions land automatically. But defaults may not suit you — a young member should arguably be more aggressive than a conservative default.

How to choose right?

Read the trustee’s fund fact sheets to understand objectives and risks, then set strategy by need; it’s your wealth, so stay engaged. Start at MPF fund comparison.