MPF default investment strategy: Retirement Schemes committee in talks with MPFA

This article is a rewrite of a report from August 2013.

With the MPFA mulling a default MPF fund, Retirement Schemes Committee member Yu Tin-yau said in August 2013 that many factors needed weighing — designing one default fund to suit everyone would be difficult — but the industry would keep discussing it closely with the authority.

What is an MPF default investment strategy?

It is the default investment arrangement for MPF members who make no investment choice. At the time, each MPF scheme had its own default fund, mostly Hong Kong-dollar money-market funds — low risk, but near-zero returns. Some trustees used life-cycle funds as defaults instead, a model the industry saw as worth referencing.

How hard is it to design a default fund?

Yu noted the difficulty: members differ in age and risk tolerance, so no single default fits all. But as the MPF system matured, default-arrangement reform was inevitable — this 2013 discussion was the prelude to the default investment strategy that followed years later.

What it means for members

A default fund is the choice for those who don’t choose — but it shouldn’t be an excuse not to care. Even with a default in place, members should understand what it holds and its risks, and check whether it still suits their life stage.

Default investment strategy is explained in the MPF education guides.