To switch or not to switch MPF? Do your homework with benefit statements and fund facts

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

With the November 1 Employee Choice Arrangement, employees could transfer the accrued benefits from their mandatory contributions in the current contribution account — once per calendar year, in a full lump sum — to a chosen trustee and scheme. Greater autonomy, yes — but remember: you don’t have to switch, and there’s no need to rush.

How should you review your current portfolio before deciding?

First check whether your existing mix still suits you: compare your current scheme against other trustees’ schemes and funds, trustee service and fund fees, then weigh personal factors — investment goals, life stage, risk tolerance.

What tools can help you compare?

First, the member benefit statement. Trustees issue at least one a year — your MPF “report card”, summarising account movements including employer and employee contributions, balances and investment gains or losses.

Second, the fund fact sheet. If your current trustee’s service, scheme or fund range disappoints, study the fact sheets of the target scheme’s funds before moving: investment objectives, portfolio mix, risk indicators, the latest fund expense ratio and performance.

Does switching guarantee better returns?

Not necessarily. Transferring accrued benefits may not improve investment returns, and past performance doesn’t predict the future. If you’re satisfied with your current trustee and scheme, staying put and letting benefits compound is perfectly reasonable.