Nearing Retirement? How to Rebalance Your MPF Portfolio

As retirement approaches and risk tolerance falls, how should workers aged 45 to 60 adjust their MPF mix? AIA pensions senior vice-president Bonnie Tse advises shifting most investments in stages into defensive, low-risk funds — keeping only about 20% in equities. It is the perennial question of the best MPF fund Hong Kong members should hold near retirement.

Why move into low-risk funds in stages?

To dodge pre-retirement market swings — switching all at once is itself risky. With only about a decade of investment horizon left, a market fall can seriously dent MPF savings, Tse explains, so most assets should move in stages into defensive low-risk options like MPF conservative and guaranteed funds. Staging — rather than a single switch — avoids the damage short-term volatility can do to a one-off move.

Should everything go into conservative funds?

No — inflation eats purchasing power, so keep some growth assets. Low-risk funds rarely beat inflation, Tse warns, so members should not convert everything. Keep a slice in medium-risk funds for a chance of inflation-beating returns. Those with higher risk tolerance need not sell all equity funds — but cap equities at about 20% so a late market wobble cannot wreck the retirement plan.

Must you withdraw everything at retirement?

No rush — decide based on market conditions. Members can take all accrued benefits at retirement age, but with no urgent need there is no reason to hurry. If markets are kind, take the lump sum; if they are depressed, leave benefits in the account to keep compounding and limit losses. Flexibility beats a forced all-at-once exit.

To compare charges and returns across MPF funds, visit MPF fund comparison.