MPF “semi-portability”: employees may transfer contributions once a year; lawmakers urge fee caps

Secretary for Financial Services and the Treasury K C Chan told the Legislative Council that currently employees can only transfer MPF accounts when employment ends; after legislative amendments, employees may — while still employed — transfer their employee-side contributions in a lump sum to another MPF scheme of their choice, once a year, which should boost market competition.

How will “semi-portability” work?

Employees may transfer the employee portion of contributions to a chosen scheme once a year; the employer portion stays with the employer’s chosen provider. On calls to let employees move the employer portion too, the government said that would seriously undermine the current offsetting of severance and long-service payments against MPF contributions.

What’s the timetable?

The MPFA estimates the industry needs about 18 months to prepare — updating IT systems, drafting operational guidelines and notifying members in writing. For employees holding multiple MPF accounts, the MPFA will remind them in writing to consolidate accounts and step up publicity on investment-risk management.

What do stakeholders say?

Parties broadly back the amendments but say protection is still lacking: unionist Lee Cheuk-yan warned a 2% annual administration fee eats 40% of MPF over 40 years and urged statutory fee caps; Democrat Wong Sing-chi slammed high fees for eroding savings; unionist Wong Kwok-hing feared weak regulation could mislead employees into high-risk products — “another Lehman”; LSD’s Raymond Chan accused the government of letting “sharks exploit workers’ blood-and-sweat money.” Scholars advised choosing funds carefully. Employees can start comparing MPF fund fees across schemes and learn careful fund selection via MPF education.