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Enoch Yiu

The city's pension regulator has introduced measures to prevent any mis-selling as 2.35 million workers begin to choose their own Mandatory Provident Fund providers from November.
The 32,000 salespeople employed by MPF providers would be encouraging people to shift to their schemes, said Alice Law Shing-mui, executive director of the Mandatory Provident Fund Schemes Authority (MPFA).
"We already have a set of regulations in place to make sure they will not mislead employees," Law said.
Established in 2000, the MPF requires employers and employees to each pay 5 per cent of salary - up to a combined HK$2,500 a month - to an MPF provider such as a bank or fund company.
A major criticism of the MPF scheme has been that employers choose the provider while employees cannot switch even if they are unhappy with the services, fees or the performance.
The government has changed the law to allow workers to transfer their own contributions to a new provider once a year free of charge. A total of HK$257.5 billion worth of MPF assets could be transferred.
"Allowing the employees to choose their own providers will add competitive pressure and lead MPF providers to improve their services' quality and performance," Law said.
She said overseas experience had shown 10 per cent of employees choose to switch providers when allowed to do so.
Under the regulation, all salespeople must register with the MPFA and they cannot use gifts or rebates to induce people to shift to their MPF schemes.
Salespeople will also need to disclose if they receive any commission from sales and to explain the risk level of the investment funds under the MPF.
They need to provide a test for employees to determine their risk appetite.
If people insist on buying funds that carry risk higher than the test result, the salespeople will have to record the conversation to confirm the client's decision. Alternatively, this could be done by a telephone recording or written confirmation.
Law is not overly concerned that there will be serious mis-selling problems.
"Unlike other investment products that may carry a very high risk, the MPF investment funds are relatively low risk," she said.
If they decide to change, workers will transfer their accumulated contributions to the new provider.
The employer's contributions will stay with the original provider, as will contributions from both the employer and the employee for the next year.
At the end of that year, the employee will be able to transfer all of their contributions to the new provider.
THE MONEY TRAIL
How employees will transfer their MPF contribution


		Fill in "Employee Choice Arrangement - Transfer Election Form" and send it to the new MPF provider.



		Employee can only transfer his or her own contribution once a year. Employer's contribution will stay with the original provider.



		The original and new MPF providers will check information and original provider will send a cheque to the new one.



		New provider will invest in funds selected by the employee.



		The contributions of both employer and employee will continue to the paid to the original provider. The employee can transfer his or her portion to the new provider one year later.



Rules in place to ensure clean switch of MPF funds

News

Hong Kong

Pension fund watchdog says everything is in place to prevent unfair practices if workers decide to shift their funds to new providers


Rules in place to ensure clean switch of MPF funds

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Pension fund watchdog says everything is in place to prevent unfair practices if workers decide to shift their funds to new providers

Pension fund watchdog says everything is in place to prevent unfair practices if workers decide to shift their funds to new providers