MPF amendment bill gazetted: transferable assets under the Employee Choice Arrangement to jump from 39% to 67%

The Mandatory Provident Fund Schemes (Amendment) (No. 2) Bill 2011 was gazetted on 9 December 2011 and introduced to the Legislative Council on 14 December. If passed within that legislative term, the Employee Choice Arrangement would launch on 1 November 2012. The most striking number in the reform came from the MPFA’s estimate: the share of MPF assets members could move would jump from about 39% to about 67%.

How would the Employee Choice Arrangement change the share of transferable MPF assets?

The Employee Choice Arrangement would let MPF members transfer the accrued benefits of their current-employment mandatory contributions to a scheme of their choice at least once a year; the MPFA estimated, based on total MPF assets as at end-August 2011, that the transferable share would rise from about 39% to about 67%.

A much bigger transferable pool meant trustees would market to employees far more aggressively — which is why the bill paired the reform with criminal sanctions banning unregistered MPF intermediaries from selling or promoting MPF products, plus a full regulatory regime for intermediaries. Regulation first, so members choosing a scheme would have basic protection.