MPF consolidation: two accounts per worker on average; MPFA to write urging mergers

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

Era analysis: The original only quoted a few lines from the MPFA’s executive director (supervision): each worker averaged two MPF accounts, some over a dozen; the authority planned to write the following year to holders of multiple preserved accounts urging MPF consolidation. That letter campaign was the most concrete move then against “zombie accounts”.

What is a preserved account?

After a job change, the dormant account in the former employer’s fund company becomes a preserved account. More accounts mean more chaos: different trustees, fund mixes and fees — and a blurred picture of one’s overall investment.

What did the MPFA plan?

• Proactive letters: in early 2013, write to workers holding multiple preserved accounts, reminding them to consider consolidation.
• Bigger publicity: ahead of November’s “semi-free choice”, launch phase-two mass promotion, including media ads and district outreach.
• 200 hotline channels: for transfer and consolidation enquiries.

Would fees fall?

The executive director (supervision) also responded: although fund companies said the choice arrangement would raise costs, the authority still saw room for fee cuts. Workers could then choose their own fund company for the personal-contribution portion — choice being where fee-cut hopes began.