Workers baffled by the Employee Choice Arrangement: 65% unsure what can move

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

The “member choice arrangement” (semi-portability) took effect in November 2012, but Hongkongers were still baffled: 65% of survey respondents did not know which contributions could move, and half said they would not move any — the Employee Choice Arrangement exposed how shallow workers’ understanding ran before it even began.

How confused were people?

65% did not know which portion could move. A consultancy’s HKU-commissioned poll of over 1,000 people found some wrongly believed past employer contributions — or both sides’ past contributions — were portable; 70% expected to control the timing and price of fund dealing — though fund dealing is nothing like instant stock trading.

Why not switch?

Too much trouble, satisfied as is, did not understand. Over half said they would not move contributions. Fees topped the criteria for choosing a scheme, followed by risk appetite and trustee track record. Confidence that MPF could secure retirement averaged just 3.7 out of 10, with nearly 60% scoring 4 or below.

What did the industry say?

Fees should fall further — but do not switch for the sweeteners. The consultancy’s chief executive put average fees at 1.73% of contributions, expecting competition to push them lower. Trustees would likely dangle cash rebates to grab clients at launch, she estimated, but such perks were not lasting — think before moving, and weigh investment performance alongside fees. Twelve years in, MPF assets neared HK$400 billion, over HK$160,000 per member — money worth thinking seriously about.