MPFA Studies Early MPF Withdrawal for Serious Illness, Phased Payouts After 65

In July 2011 the MPFA revealed it was studying two relaxations to MPF withdrawal rules: members with critical or serious illnesses could withdraw accrued benefits early, and those reaching 65 would no longer have to take everything in one lump sum — phased withdrawals would be allowed.

Why relax the rules?

Because the current law, tying withdrawal to age 65, is too rigid. The ordinance permits early withdrawal only on early retirement at 60, permanent departure, total incapacity, small balances or death. The MPFA believes serious illness deserves separate consideration, and phased payouts after 65 would suit retirees’ cash-flow needs.

When will it be decided?

An announcement was expected by end-2011. The MPFA was to table amendment proposals within 2011. Trustees broadly agreed but flagged implementation costs; the industry also wants a clear definition of serious illness to avoid disputes.

What else is on the reform table?

Self-employed tax filing. The MPFA was discussing with the Inland Revenue Department ways to improve self-employed filing so contributions don’t fall short for administrative reasons, while the Employee Choice Arrangement (ECA) continued to advance. Compare MPF funds’ fees and returns at MPF fund comparison.