How to choose an MPF provider: don’t switch for switching’s sake

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

With MPF semi-portability (the Employee Choice Arrangement) expected in November 2012, workers would gain real power to choose their preferred providers. A senior AIA pensions executive shared her selection playbook.

How should workers choose without getting burned?

Her first rule: if your current provider already meets your needs on service, fees, fund choice and performance, don’t follow the crowd and switch for switching’s sake — it only wastes time and energy.

If a switch was genuinely needed, she urged a “full-perspective” assessment — never decide on fund management fees alone: expense ratios, fund choice, performance and platform usability all directly affected every dollar contributed. She also advised checking whether a provider’s fund range was diverse enough, with different risk levels within one scheme for flexible switching.

Risk tolerance changes — review regularly

Risk tolerance shifts with life stages, she stressed, so workers should revisit investment objectives and adjust portfolios to balance risks. Four questions to ask first:

• What are your personal goals and retirement plans?
• How old are you, and how many years to retirement?
• What are your investment objectives?
• How much investment risk can you accept?

How were providers fighting for clients?

Ahead of semi-portability, providers rolled out sweeteners: one launched a “triple play” — a preserved-account offer (new clients transferring preserved accounts got a one-off 0.2 per cent management-fee rebate on the past 12 months’ average balance, paid in fund units), staged withdrawals (post-65 withdrawals by schedule or fixed amounts instead of one lump sum), and an e-Submit service (agents filing preserved-account applications or transfers on pre-set iPads).