Why “semi” free choice? Four questions on the Employee Choice Arrangement

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

The November 2012 “MPF semi-free choice” was much discussed — but what made it only “semi”? The Employee Choice Arrangement gave employees one right: to move accrued benefits from their own mandatory contributions in the current contribution account to a chosen trustee and scheme, once per calendar year, in one lump sum.

Why “semi”?

Because the employer portion stays put. Employees could move only their own share; employer contributions remained in the original scheme — hence “semi”. Doing nothing and staying put was equally valid.

What four factors should guide the decision?

No one had to switch, and certainly not immediately. If the employer’s chosen scheme suited you, staying was fine. Before deciding, weigh:

Does switching guarantee better returns?

No. Moving benefits does not necessarily deliver better investment returns — think before acting. Remember: switching was a right, not an obligation.

Questions? Call the MPFA hotline on 2918 0102 or visit www.mpfa.org.hk.