MPF personal accounts: how to consolidate 4.1 million “ghost accounts”

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

When you change jobs, where does the money in your old employer’s MPF scheme go? It becomes a preserved account — and Hong Kong had 4.1 million of them. Consolidating MPF personal accounts (the new name for preserved accounts) was the most practical financial move ahead of the 2012 choice arrangement.

What are “ghost accounts”?

Preserved accounts left behind in former employers’ schemes are nicknamed “ghost accounts”. Some workers had more than 20 of them. Employees could already move these accounts themselves, and the MPFA was set to gain legal power to proactively contact holders of many preserved accounts and encourage consolidation.

How do preserved-account transfers differ?

Unlike active contribution accounts — transferable once a year — preserved accounts can be moved to a new chosen account in full at any time, with no limit on frequency. One caveat: once you merge several preserved accounts into one, it cannot be split again — future transfers must move the whole balance.

For active contribution accounts, employees may move savings to the same favoured account each year, or to different trustees in different years. Even without changing jobs, that means up to three transfer opportunities in three years.

What to watch before consolidating?

Don’t transfer for its own sake. The MPFA warned about the investment “gap” during transfers — the time lag between selling and buying can produce buy-high-sell-low losses. Also weigh the return and fee implications of spreading savings across multiple accounts.

Questions? The MPFA’s 200-line hotline: 2918 0102.