The Employee Choice Arrangement: Hong Kong’s MPF “semi-portability” explained

In February 2012, Hong Kong’s MPF “semi-portability” was still on the drawing board, yet it was already the talk of the town among the city’s two million-plus employees. What they were waiting for was the right — once a year — to move the accrued benefits from their own mandatory contributions into an MPF scheme of their choice. Choosing a trustee would no longer be the employer’s prerogative alone.

What is the Employee Choice Arrangement?

The Employee Choice Arrangement — nicknamed “semi-portability” — lets employees transfer the accrued benefits derived from their own mandatory contributions under their current employment into an MPF scheme of their choice. Transfers can be made in a lump sum at least once a year, but the employer’s share of mandatory contributions stays put — which is why it is only “semi” portable, not fully portable.

The timetable at the time

The MPFA’s plan then was to launch the arrangement on 1 November 2012. First, though, the government had to complete legislation regulating MPF intermediaries: a bill tabled in late 2011 proposed a statutory licensing regime banning unregistered intermediaries from selling MPF products, with the MPFA as the registration body and the HKMA, the Insurance Authority and the SFC as frontline regulators. Only with sales activity regulated would members be adequately protected once 2.5 million employees became sales targets.

Why only “semi”?

The key is scope: only the accrued benefits from the employee’s own mandatory contributions could move; the employer’s share stayed in the employer’s chosen scheme. In other words, workers gained partial autonomy, not full control. Providers were already preparing for the expected fee war and battle for clients, with some cutting management fees and hiring ahead of the launch.

For the basics of how the MPF system works, see the MPF education guides.