The Employee Choice Arrangement covers only employee contributions — the employer’s share stays put

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

MPF semi-portability was about to launch, but many misunderstood “free movement” as “free fund choice”. To be clear: the Employee Choice Arrangement covers only the employee’s contributions — the employer’s share stays put.

Why cannot employer contributions move?

Because the law only permits moving the employee’s share. The employer chooses the trustee for its MPF scheme, and employer contributions stay in that scheme; only the employee’s own contributions can move to a preferred provider. The 30-year contract system never guaranteed lifetime employment — and here was proof the design was not fully free.

What can employers do?

Employers can switch schemes too — but must weigh the admin burden. MPF administration is no light matter: employer contributions are generally due no later than the 10th day after each contribution period, and switching means redoing the whole pipeline — so many employers preferred to stay, sparing the administrative pain.

How should workers adapt?

Know the system’s boundaries to maximise within them. Semi-portability was progress, not full portability: the employee-contribution slice was the only chip you could play freely.