Over 70% of Hongkongers didn’t understand “semi-portability”: unpacking the Employee Choice Arrangement survey

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

AIA Pension and Trustee published its “ideal life” survey in April 2012 and found more than 60 per cent of respondents didn’t know common MPF terms, while about 73 per cent said they didn’t understand the Employee Choice Arrangement — nicknamed “semi-portability” — and some had never heard of it at all.

What did the survey find?

Over 60 per cent of respondents didn’t recognise MPF terminology — 30 to 40 per cent had never heard of the “expense ratio”, “life-cycle funds” or the “compounding effect”. Some 73 per cent said they didn’t understand the Employee Choice Arrangement. Overall, 10 per cent said they would switch MPF providers immediately once “semi-portability” launched, and 46 per cent said they would consider changing trustees.

Why not follow the crowd and switch?

An AIA Pension senior executive warned against blindly following others: members should first check whether their current and candidate trustees can meet their investment goals and whether the management style suits their needs. She advised employees to review their MPF mix every six months, rebalance when appropriate, consolidate preserved accounts, and consult a professional adviser if their knowledge fell short.

How were trustees preparing?

The AIA executive said preparations had started at the end of 2011: more fund choices and flexibility, pushing for better fund returns, and building an electronic platform to make account management simpler. Clients who stayed with AIA would get a rebate (fee cuts depended on market conditions), and the company aimed to complete transfers for clients as quickly as possible regardless of the official transfer window.