MPFA Studies Non-Profit Trustee, Early Withdrawal for Serious Illness

In July 2011 the MPFA revealed several reform directions under study — including a non-profit trustee offering low-fee choices, and early MPF withdrawal for members with serious illnesses.

Why a non-profit trustee?

To give members a low-fee alternative. All current trustees are for-profit and criticised for high fees. A non-profit trustee could offer low-fee plans and force rivals to cut fees through competition.

How would early withdrawal for illness work?

The definition of serious illness must be clear. The MPFA is studying early withdrawal of accrued benefits for members with critical illnesses, but details — the definition, medical certification requirements — need pinning down to avoid disputes. Proposals were expected within 2011.

What else is being reformed?

Phased withdrawals after 65. The MPFA is also studying phased payouts after 65 so members needn’t take everything at once, matching retirees’ cash-flow needs. Trustees broadly agree with the direction but flag implementation costs.