Authority wants workers to merge MPF accounts onto one
Some hold more than 10, but officials want employees to consolidate them ahead of the portability scheme
Employees with multiple Mandatory Provident Fund accounts are encouraged to merge them, so it will be easier to run a new scheme allowing clients to transfer money to trustees of their choice.
Cynthia Hui, executive director of the government's MPF Schemes Authority, which manages the retirement fund, said yesterday that they would contact clients with multiple accounts early next year and urge them to consolidate the accounts.
On average, Hong Kong workers have more than one account. But in extreme cases, one can hold more than 10, according to Hui.
Workers get new MPF accounts whenever they switch employers, but do not like to go through the trouble of combining their old accounts - which are later classified as "preserved accounts" - with new ones.
The MPFA's announcement comes as it prepares to roll out the portability scheme in November, which will allow account holders to transfer part of their MPF contributions and returns to 19 selected private service providers, including banks, insurers or other financial institutions, once a year. Each transfer will take six to eight weeks.
The decade-old fund has been criticised for high management fees and failing to provide stable income for retirees.
In a survey released in May by accounting firm Ernst & Young, the fees charged to local MPF account holders are 1.74 per cent of the assets held under management. This is higher than in Australia, where the rate is 1.21 per cent, as well as Singapore (1.41 per cent), Britain (1.19 per cent) and Chile (0.56 per cent).
The portability scheme is aimed at addressing these problems by allowing clients to park their money in facilities with competitive rates. But employees cannot ask their employers to automatically transfer their salary contributions to the trustee under the new programme. MPFA officials insist this will minimise administrative hassles.
Around 71 per cent of workers in the city are covered by the MPF, as of March this year. As of June, the fund was worth HK$400 billion.
The number of preserved accounts - a key reason why workers hold multiple accounts - has surged from 3.77 million in June last year to 4.1 million in June this year.
John Wan, MPFA senior manager, estimates that after the portability scheme comes into effect, some 10 per cent of account holders out of 2.3 million employees will use the transfer option.
Hui said a study would be conducted after the scheme's implementation to improve the rules. For example, a possible option is to allow employees to deposit all their salaries into a designated trustee.
However, in a survey this month, a university found that many workers would not transfer their funds because it would be a hassle. Two-thirds of 1,000 MPF account holders were confused about the new scheme.
Hui and Wan denied that the portability option would complicate matters.