Employees prepare to switch MPF providers

Around 31% of employees surveyed are already considering moving to another MPF provider.

Around one-third of Mandatory Provident Fund-member employees say they may switch to another MPF service provider once the employee choice regime is implemented, according to a survey commissioned by the Hong Kong Investment Funds Association (HKIFA).

A total of 3l% of those surveyed by the HKIFA in July and August said they would consider the switch. The key reasons cited for switching providers are the desire to look for better investment returns (56%) and more fund choices (28%).

Around 45% indicate they will not consider making a switch. Mainly this is due to the perception that the switching process may be rather complicated and would be a hassle.

Around 16% do not see much difference between providers and thus have no intention to switch.

The HKIFA believes the passage of the bill that paves the way for more freedom of choice -- and is also likely to increase competition -- encourages employees to adopt a more proactive approach to the management of their MPF investment.

"The introduction of employee choice is a major milestone in the development of the MPF system," says Desmond Ng, chairman of the HKIFA pensions sub-committee. "By further empowering the employees, the portability system can potentially result in major changes in the competitive landscape. It will also increase employee's' sense of ownership and can be an important catalyst to prompt employees to attach greater importance to MPF investments and retirement investment generally."

Michael Ha, vice-chairman of the HKIFA pensions subcommittee, says employee choice must come with a more conducive regulatory framework which gives fund managers greater investment flexibility to structure more products to cater for the different need profiles of employees. "There should also be a comprehensive and ongoing effort for investor education to ensure that employees have the necessary knowledge and tools to make informed investment decisions," he says.

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