MPF “semi-portability” transfers face 6-to-8-week deadline, fines for delays

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

MPF “semi-portability” — the Employee Choice Arrangement — was nearing implementation, with employees able to move their own contributions from November 2012. After meeting trustees in early March 2012, the MPFA proposed a six-to-eight-week deadline for completing transfers, with fines for overruns — longer than the 30 days required under existing law, and a prospect the market feared could leave contributors exposed to volatile markets mid-transfer.

What does an MPF transfer involve, and why six to eight weeks?

The MPFA says switching trustees involves three main steps — redeeming units in the old scheme, moving the money, reinvesting in the new one — which under MPF legislation generally take six to eight weeks, though the regulator is studying ways to shorten it.

Why does the market want it cut to four weeks?

The market wants four weeks: during a two-month limbo, a sharp market swing could hit contributors whose money sits ‘out of the market’ in transit — with nobody liable for the loss. The trustees’ association met on 1 March 2012 to respond.

Where does the industry disagree?

HSBC-group trustees said a month was unworkable and wanted at least five weeks. Critics asked whether the top three — holding nearly 59 per cent of the market — simply disliked streamlining client exits. HSBC Insurance flatly denied it. (Editor’s note: corrupted characters in the original have been reconstructed as “HSBC” based on context.)

What are the industry and the MPFA saying now?

The trustees’ association chairman — also a bank-trustee group chief executive — said the industry had reached consensus with the MPFA on six to eight weeks, but declined to discuss any split; the MPFA said it would keep studying compression.

Employee choice lets workers vote with their feet on trustees for the first time — before switching, compare schemes’ fees and services via the MPF education hub.