MPF semi-portability takes effect in November: your Employee Choice Arrangement questions answered

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

On 1 November 2012, MPF semi-portability officially took effect. What would the Employee Choice Arrangement change, and how would intermediaries be regulated? Here are the key questions answered (the original was written as an office dialogue; a few garbled characters have been reconstructed from context).

What can I transfer under the arrangement?

Once per calendar year, employees could move the employee-contribution portion of their current-employment account, in one lump sum, to a trustee and scheme of their choice; the employer’s portion could not be moved. Note that only already-accrued employee contributions were transferable — subsequent contributions still went into the employer’s original scheme until the next calendar year.

In other words, where the boss used to choose the MPF scheme, employees finally gained real choice over their own share of contributions. The MPFA expected providers to market their schemes and funds more aggressively to win clients.

How are intermediaries regulated?

Fresh legislation required intermediaries to register with the MPFA from 1 November 2012 before conducting regulated activities such as selling or promoting MPF schemes. Cold calls from self-styled MPF intermediaries were already common at the time, each talking up their own products; the new law brought such sales activity under regulation to protect members’ interests.

Members with questions could call the MPFA hotline 2918 0102 or visit www.mpfa.org.hk.