How to use your MPF annual benefit statement as an investment check-up

Adapted from a report published in March 2012.

February and March are statement season, when trustees mail out annual benefit statements. After a choppy 2011, many members opened theirs with mixed feelings — but rather than dwelling on one bad year, the smart move was to use the statement as a proper check-up on whether the portfolio still matched their retirement needs.

How can the annual statement guide a portfolio review?

Start a review from three items in the statement: total account gains or losses, the account balance, and the fund fact sheets. The statement shows gains and losses both since you joined the scheme and over the past year; the balance section breaks holdings down by fund, so you can judge whether your choices still fit your needs and risk tolerance; and the fact sheets — enclosed by MPFA rule — carry each fund’s objectives, performance, top-ten holdings and risk indicator, essential reading before any switch.

What’s the most common review mistake?

Fixating on the past year’s figure and forgetting that retirement investing is a long game. In volatile markets especially, stay calm and look further out, weighing total gains and losses since you joined. Never sell in a panic: it locks in losses and can cost you the rebound that follows.

Which life changes call for a fresh review?

Marriage, children, buying a flat, promotion, changing jobs or approaching retirement can all shift your goals and risk capacity — each is a cue to revisit the mix. As you age, tolerance for high-risk assets typically falls and the bond weighting should rise. Most trustees offer risk-profiling questionnaires to help; don’t skip them.