Semi-Portability: 30% of Hongkongers Considered Switching MPF — Transfers Take 6–8 Weeks

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

Semi-portability — the Employee Choice Arrangement — took effect November 1, 2012, letting employees annually move their own contributions to a chosen MPF plan. Fidelity International’s Hong Kong institutional head said industry surveys consistently showed about 30% of people considering a switch — but switching was not instant: the whole process took 6–8 weeks.

How did switching work?

File with the new trustee; they handled it. With correct paperwork, transfers could complete within 30 days. The process meant the old trustee selling out to cash, then the new trustee buying fund units — with an investment gap in between.

What were the risks?

Sell low, buy high. Markets could move during the transfer window, leaving investors selling low and buying high. The Fidelity executive’s advice: no rush — the key question is whether the fund suits you; compare like-for-like performance before moving.

Would costs be passed on?

Operators’ costs rose, but they would play along. Every operator spent extra on staff and systems for semi-portability; Fidelity added over 10 call-centre staff. Running MPF was a long-term business, the executive stressed, and firms would cooperate. Banks and insurers ran about 87% of MPF assets, fund houses just 8% — but younger employees’ shift to online and mobile selection favoured leaner fund houses.

What is the lesson from 2012?

30% considered, 10% moved — the gap between intent and action. 2012 surveys said three in ten considered switching; the MPFA expected one in ten actually would. Semi-portability granted a right, not an order — and the 6–8 week gap was the price of thinking it through.