More managing their MPF investments

Caroline Zheng

The employee choice arrangement under the Mandatory Provident Fund scheme has been activated more than a million times since it was launched 12 years ago, with total activity amounting to over HK$48 billion in value as of last month, says MPF Authority chair Ayesha Macpherson Lau.

Launched in November 2012, the arrangement - often called "MPF semi-portability" - enables employees to transfer their portion of contributions and investment returns to a provider of their choosing once a year, while employer contributions remain nontransferable.

Lau noted that participation in the arrangement has averaged 92,000 transfers annually from 2019 to 2023 - 17 percent higher than the previous five-year period - indicating that more scheme members are actively managing their MPF investments.

Chief Executive John Lee Ka-chiu proposed in his policy address that the MPFA work out details for implementing "full portability," under which employees will be able to transfer the accrued benefits derived from their employers' contributions to a new provider.

Lau said achieving full portability has long been an MPFA objective as it grants greater autonomy to employees, which in turn drives competition in the MPF market and enhances retirement protection for the workforce.

She said the government's recent announcement that the MPF offsetting arrangement will be abolished - effective on May 1 next year - removes a significant barrier to full portability.

The abolition will prevent employers from using accrued benefits derived from their MPF contributions to offset severance or long-service payments, she added.

Additionally, Lau noted that the eMPF platform, which has been in operation since June, will be fully functional by the end of next year, making the implementation of full portability of the MPF scheme more cost-effective.

The centralized electronic platform is designed to streamline MPF scheme administration.

Once full portability is in place, the MPFA believes the portion of contributions under employees' control will gradually increase from the current 50 percent to 100 percent over time.

caroline.zheng@singtaonewscorp.com