MPF Switching Under “Semi-Portability”: Beware the Buy-High-Sell-Low Gap

Rewritten from reporting published in April 2012.

The Employee Choice Arrangement was expected in November 2012, letting employees move the employee portion of their monthly mandatory contributions to another provider once a year. The switch itself carried no fees — but the process could stretch six to eight weeks, and that investment gap could leave you selling low and buying high.

Why Does the Switch Create a Buy-High-Sell-Low Risk?

Because the transfer takes six to eight weeks, during which your accrued benefits are not invested in any fund, and market swings in that window can produce a sell-low-buy-high outcome. An MPFA corporate affairs executive stressed that the six to eight weeks amounted to an investment gap, urging members to be especially careful before transferring and not to chase the launch blindly.

How Do the Six to Eight Weeks Break Down?

Counted from the day the member files the application, the process falls into three stages, as set out by the MPFA:

How Does the Once-a-Year Rule Work?

The annual transfer rule does not mean 12 months must separate two transfers — it means one transfer opportunity per calendar year, from 1 January to 31 December. Only the member’s own contribution portion moves; the employer’s administration arrangements are unaffected. In short: whether and when to switch should always come down to your own needs.