MPF early withdrawal: the three gatekeeping rules proposed in 2011

When the MPFA opened its consultation on 16 December 2011, it proposed adding certified “terminal illness” as a sixth ground for early MPF withdrawal. But how is “terminal” measured, which doctors get to say so, and how much can be taken at once? The 40-plus-page consultation paper laid out three gatekeeping rules for the public to weigh in on — designed to keep the new concession abuse-proof.

What checks would terminal-illness withdrawal face?

The 2011 consultation paper proposed three gates: whether terminal illness meant six or twelve months of life remaining, how many doctors must certify it and whether Chinese medicine practitioners counted, and whether payouts would be capped. The industry wanted an official definition and final MPFA approval, so trustees would not interpret the rules differently.

The three gates, one by one

1. The life-expectancy yardstick. Should Hong Kong follow local insurance policies and define terminal illness as six months of expected life remaining, or follow Australia and stretch the countdown to twelve months?
2. Conditions on medical proof. To keep the concession abuse-proof, should certification come from one doctor or two? Could the certificate be issued by a registered Chinese medicine practitioner, or must it be a Western doctor? Should further requirements apply, such as relevant specialist credentials?
3. A cap on the payout. If members may use MPF as life-saving emergency money, should they take it all in one lump sum, or should there be a ceiling — say, only 20% to 50%?

Home purchases and paying off maxed-out credit cards were entirely off the table, lest members treat MPF as a cash machine and hollow out the retirement-protection system.

The industry’s two demands

Two demands surfaced early. First, the industry wanted Hong Kong to follow Singapore and the mainland by publishing an official definitional blueprint for “terminal illness” for trustees to work from, avoiding complaints and disputes. Second, even with compassionate discretion, the final approval should rest with the MPFA — just as, among the five existing early-withdrawal grounds, “permanent departure” already required the regulator’s gatekeeping to shut the loophole of false claims dressed up as returning to hometowns.

A sixth ground

The paper proposed adding certified life-threatening terminal illness as a sixth ground alongside the five existing ones (incapacity, permanent departure and others), letting members withdraw before the retirement age of 65. The consultation closed at the end of March 2012. See the MPF education guides for the current early-withdrawal rules.