MPF transfers take six to eight weeks: the risks to know before switching

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

After the choice arrangement launched, could MPF transfers settle same-day like stock trades? No. An MPF transfer typically took six to eight weeks end to end, with an investment “gap” in between — risks every switcher needed to understand.

How does the transfer process work?

You contact the new trustee first, then wait for both trustees to verify. The steps: choose a new trustee, enrol in the new scheme and submit the transfer form; the new trustee checks the details, then passes them to the original trustee for re-verification; once cleared, the original trustee sells the fund units and mails a cheque to the new trustee; the new trustee buys the corresponding units as instructed. Complete, accurate paperwork could shorten the wait.

What is the investment “gap”?

Mid-transfer, your money sits in no fund at all. The lag between selling and buying can produce buy-high-sell-low outcomes — the biggest hidden cost of switching, and worth weighing before acting.

Can you name your price? What about guaranteed funds?

No price-setting allowed. Like other fund trades, MPF deals execute at an “unknown price” fixed after the trading day’s close based on net asset value.

Moving a guaranteed fund can void the guarantee. Most guaranteed funds attach conditions — such as no switching during a lock-in period. Exercising the transfer right and selling out may forfeit the guaranteed return, so read the guarantee terms first.

Any transfer fees?

None. Under MPF law, trustees may not charge employees anything for transferring accrued benefits to another scheme.

Questions? Call the MPFA hotline on 2918 0102 or visit www.mpfa.org.hk.