MPF consolidation: the simpler the preserved accounts, the clearer the picture

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

“Insurance has orphan policies — turns out MPF has orphan accounts too.” Many workers changed jobs several times and left old-employer MPF assets untouched. MPF consolidation — simplifying preserved accounts — was the move financial columns kept urging that year.

Where do preserved accounts come from?

Within three months of leaving a job, if the original trustee receives no instruction, accrued benefits automatically shift from the contribution account to a “preserved account”, continuing under the pre-transfer investment mix. By March 2012 Hong Kong had 4.035 million preserved accounts; against about 2.576 million employees plus self-employed, that meant 1.5 preserved accounts per worker on average. An AIA MPF survey also found nearly half of respondents had never consolidated.

What’s wrong with too many accounts?

Complexity and forgetfulness. Too many accounts waste time and blur the overall portfolio picture, preventing timely rebalancing and costing growth opportunities.

How to consolidate?

• Forgotten how many you hold? Ask the MPFA — it keeps every member’s records.
• Complete one “scheme member fund transfer application form” per account and submit to the new trustee; no need to notify former employers.
• Alternatively, move accrued benefits into the new employer’s contribution account for unified management.

An AIA MPF executive reminded readers: busy Hongkongers easily neglect MPF investments; merging preserved accounts into one keeps the picture clear.