MPF preserved accounts: why 4.1 million “zombie accounts” wouldn’t budge

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

Era analysis: The original ran only a few lines: as of June 2012, MPF preserved accounts had hit 4.104 million, dwarfing 2.58 million active accounts; the market expected November’s choice arrangement wouldn’t shrink these “zombie accounts” fast. That judgement proved accurate — account fragmentation plagued MPF for years.

Why so many “zombie accounts”?

Every job change creates one. When workers moved jobs, the dormant account in the former employer’s scheme became a preserved account; the government’s HK$6,000 MPF injection that year also spurred a surge of new accounts, many never touched again.

Why couldn’t “semi-free choice” fix it?

Because the arrangement targeted active contribution accounts; preserved accounts could be moved anytime, but only if holders acted. With two accounts per person on average — some holding a dozen — and no prompt or incentive, the accounts just slept on. The MPFA said it would proactively contact holders of many preserved accounts to encourage consolidation, but “zombie” numbers stayed high for years — proof that voluntary consolidation had limits.