MPF semi-portability is coming: one switch a year — don’t chase perks, watch the fees

MPF “semi-portability” is about to launch, with the Mandatory Provident Fund Schemes (Amendment) Bill 2009 nearing enactment: employees may choose their own trustee once a year, but only past employee contributions can move — future employer and employee contributions stay put.

What should you watch when switching?

Don’t chase small perks; look at long-term management fees. Banks and insurers are dangling supermarket coupons and cash vouchers to win clients — nice to have, but what matters is MPF fund fees (management fees, admin fees and the like). MPF is a long-term investment where lifetime fees hugely affect returns; never let a perk blind you to fees and performance.

How did the system mature step by step?

MPF launched in 2000; an operations review committee followed in August 2001; SARS in 2003 battered Hong Kong stocks and sparked public curiosity about fees and performance; the Code on Disclosure for MPF Investment Funds arrived in June 2004; the MPFA’s fee comparison platform launched in 2007. The regime keeps improving, always a step behind — beyond government support, managing money is ultimately on you.

How do you get quality information?

In this information explosion, even your financial adviser wants a say over your MPF; older folks won’t spend hours on MPF websites. Most of your MPF intelligence comes from advisers or friends — you can lean on them partly, but stay clear on your own MPF position (fees, performance). For quality market information, talk to your adviser more.

Semi-portability is just one step; full portability lies ahead. To compare fees ahead of the Employee Choice Arrangement, visit MPF fund comparison.