Transferring MPF benefits? Watch the bid-offer spread first

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

Consolidating preserved accounts sounds appealing, but moving accrued benefits is not free: a transfer can mean selling out of the old scheme’s funds and buying into the new scheme’s, and some funds carry a bid-offer spread. If you hold a guaranteed fund, check the lock-in conditions too — don’t sacrifice a guaranteed return for the sake of switching.

How do I transfer my MPF accrued benefits?

To transfer MPF accrued benefits, complete the “Scheme Member’s Request for Fund Transfer Form” with supporting documents and submit it to your chosen trustee. Before you move, ask the relevant trustees whether your old funds carry a bid-offer spread — the MPFA’s fee comparison platform can help — and if you hold a guaranteed fund, read the lock-in terms carefully so you don’t lose out.

The transfer process in four steps

1. Your former employer notifies the trustee. Within 10 days after the end of the month in which you leave, your former employer must notify the trustee in writing — or via that month’s remittance statement — that your employment has ended.

2. No notice from the employer? File your own declaration. If the employer never submits the termination notice, you can submit a “statutory declaration of termination of employment” directly to the trustee.

3. Submit the form to your new trustee. Complete the fund transfer form with the required supporting documents and return it to your chosen trustee, who will handle the transfer.

4. No instructions means an automatic preserved account. If the old scheme’s trustee receives no instructions from you within three months of the termination notice, your benefits are automatically moved into a preserved account under the old scheme within 30 days after that window, where they keep compounding.

Two cost traps to avoid

Bid-offer spreads: some funds charge a spread on buying and selling, so a transfer — sell old, buy new — can incur transaction costs. Check with the trustee beforehand or look up the MPFA’s fee comparison platform (cplatform.mpfa.org.hk).

Guaranteed-fund lock-ins: if you hold a guaranteed fund under the old scheme, transferring out may breach its conditions (such as a lock-in period), forfeiting the trustee’s promised guaranteed return. Read the terms before you move.

Questions? Call the MPFA hotline on 2918 0102; for MPF basics, see the MPF education guides.