Regulator wanted “semi-portability” transfer time cut from 6–8 weeks to 5, but trustees disagreed

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

Market sources said the regulator wanted the Employee Choice Arrangement — nicknamed MPF “semi-portability” — to cut the full trustee-switching process from the initially proposed six to eight weeks to about five weeks once the central electronic platform went live at the end of 2012, so members would not sit in an investment gap long enough to be forced into selling low and buying high. Major trustees including HSBC were said to oppose the move.

Why shorten the transfer window?

The regulator’s push was about protecting workers: during the transfer, accrued benefits sit in no fund at all, so a longer gap means a bigger risk of market swings forcing a sell-low-buy-high outcome. HSBC and Hang Seng, Manulife and AIA together held 58.9 per cent of the market, with HSBC–Hang Seng alone at 32 per cent. The big trustees reportedly worried they would not have enough time to process so many members; HSBC Insurance declined to comment.

What were the industry’s three disputes?

Beyond the timeline, three flashpoints remained: the statutory deadline for step two, signature verification, and an overly complicated transfer form. Benefit transfers involved three main steps, with step two bound by law to finish within one month — the original trustee verifying the form, selling the accrued benefits for cash, then mailing a cheque to the new trustee. The authorities hoped to cut that from 30 days to about 18, but major providers reportedly objected on technical and operational grounds.

Why was a signature such a problem?

The MPF launched at the end of 2000, and the signatures of more than two million workers may well have changed over a decade — verification takes time. One dominant trustee was said to insist a member’s signature match the decade-old specimen before approving a switch, forcing forgetful workers to re-sign in person; smaller trustees suggested relaxing the rule, verifying by phone as banks do for credit cards. The MPFA took no position, leaving the final approach to industry consensus. The third dispute was the hard-to-complete transfer form (it asked for items like the employer identification number), which the industry wanted simplified — the regulator was open to that.