How to choose an MPF trustee under the Employee Choice Arrangement

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

The Employee Choice Arrangement — Hong Kong’s MPF “semi-portability” reform slated for November 2012 — would let employees move the employee-contribution portion of their accrued benefits to a trustee of their choice once a year. An AXA sales executive wrote in April 2012 on what members should weigh when picking one.

What is the Employee Choice Arrangement?

The Employee Choice Arrangement is the 2012 MPF reform nicknamed “semi-portability”. Under the new rules, employees may once a year transfer — in a lump sum — the accrued benefits built from their own mandatory contributions into a personal account under a scheme of their choice, while the employer’s portion stays with the employer-nominated trustee. The aim is to give members greater control over their retirement savings.

What four things matter when choosing a trustee?

1. Whether its service keeps pace with the times. The MPFA has refined the system continuously since 2000; a trustee’s long-term development goals — reviewing market needs, introducing better services — shape the next decade of your experience.
2. Breadth, depth and speed of service. Breadth means contact channels: hotlines, mail, websites, mobile apps, even face-to-face service centres. Depth means functionality, such as same-day online fund switching. Speed means staffing and expertise — how long you wait and how well your questions are answered.
3. Background and scale. Nineteen MPFA-approved trustees operated in Hong Kong at the time, all required to meet standards on financial soundness, internal controls and experienced management. Trustees that keep investing in systems and service, with an international outlook, understand members’ needs better.
4. Fund range and manager strategy. Compare fund types, investment policies, manager quality, track records and fees — and check for a multi-manager strategy, where reputable specialist managers run individual funds, giving members more choice.

Why look beyond fees and returns?

Fees and returns matter, but a trustee’s financial strength, development strategy, responsiveness to markets, dealing details and fund-switching turnaround all affect decades of retirement savings. MPF is a long-term investment; spending a little more time comparing pays off.