Nearly 90,000 switch under MPF semi-portability; authority floats low-fee “core fund”

Nearly a year after launch, Hong Kong’s MPF semi-portability scheme had drawn about 89,000 transfer applications, the Mandatory Provident Fund Schemes Authority said. Transfers typically take three to four weeks — far shorter than the six to eight weeks originally expected. The authority hopes further digitisation can shave another week off processing time and cut trustees’ administrative costs.

How long does a transfer take? Three to four weeks — half the expected time

MPFA chief operating officer and executive director Diana Lo said the 89,000 applications generally completed in three to four weeks, well below the original six-to-eight-week estimate. The authority wants to digitise further and cut another week.

The MPFA has also written to 180,000 members holding at least four MPF accounts, urging them to consolidate; 1,200 have responded so far. With 471 funds on the market, many employees simply do not know how to choose.

What is a “core fund”? Lower fees, age-based auto-adjustment

For members who “don’t know how to choose”, the MPFA is considering a low-fee core fund: a fee-controlled default fund whose asset mix adjusts automatically with the member’s age — more aggressive when young, more conservative when older. Standardised management should create economies of scale and lower administration fees. The authority will consult the industry, aiming for a public consultation in the first half of 2014.

The practical point: if you have never made an MPF investment choice, your employer’s default arrangement for you could one day be this kind of low-fee core fund rather than each scheme’s own default product. To see what your scheme charges today, compare fund fees.