MPF withdrawals at 65 were set for an overhaul: phased payouts and early access for the terminally ill

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

The MPFA board passed two major proposals for the government to legislate (no timetable then):

1. Retirees would no longer have to take MPF as a lump sum — phased withdrawals would be allowed, with the authority setting minimum amounts and frequencies
2. Employees with terminal illness and under a year to live could withdraw everything early on a registered doctor’s (Western or Chinese medicine) certificate

Why allow phased MPF withdrawals?

After a three-and-a-half-month public consultation drawing 287 submissions, the proposal was: anyone reaching retirement age or qualifying for early withdrawal could choose a lump sum or phased drawdown of all MPF benefits. The authority could set minimum and maximum frequencies and minimum amounts per withdrawal to keep payouts reasonable and administration simple.

Two-thirds of consultation respondents agreed members and trustees should agree the arrangement between themselves, with the law setting only minimum standards via the authority.

What counted as “terminal illness” early withdrawal?

A disease endangering life and reducing life expectancy to 12 months or less. Members needed a certificate from one registered doctor or registered Chinese medicine practitioner, issued no more than 12 months before the claim.

The authority said the one-year certification followed Australian practice. Some medical professionals worried about liability if the prognosis proved wrong; the authority promised guidance on certification criteria — based on reasonable evidence, with just one registered doctor’s signature required.

How was it received?

Both proposals won about 90% support in consultation. A union called the measures welcome but urged the government to study universal retirement protection; a labour-sector lawmaker and a union executive called the proposals reasonable and pressed for swift legislation.

The injustice being fixed: some terminally ill contributors could die without ever qualifying to touch their MPF.