Typically astute and informed about property and personal investments, Hongkongers have always been lukewarm about the Mandatory Provident Fund (MPF) and its promised benefits. Despite the best efforts of scheme providers to explain the mechanisms and funds available, concerns still linger about who gains most.
The imminent arrival of the Employee Choice Arrangement (ECA), giving individuals greater control over their personal contributions, should dispel certain gripes. Importantly too, even if people opt not to change provider, they should take this as a spur to check in detail the performance of their accounts and become active managers, not just passive observers, of their accumulating MPF wealth.
"Scheme members should review their MPF portfolio at least once a year," says Philip Tso, head of investment for consultancy firm Towers Watson Hong Kong. "Ideally, this should coincide with the distribution of the annual benefit statement. Members should take the opportunity to understand the performance of their investment funds and, if necessary, revise their choices."
It often happens, Tso says, that investors are unsure where their monthly deductions are going. They have forgotten which choices they made on joining and have since let events take their course.
To ensure things are on track, the smart move is to look again at income, existing allocations, the full up-to-date range of fund options, and one's personal risk profile. The latter obviously changes through the years as retirement approaches.
For that reason, Tso suggests it also makes sense to do a risk profile review every three years as one step to picking the most appropriate funds.
Understandably, there is a degree of caution about recommending a preferred portfolio mix, since so many variables can be involved. However, most professional advisers underscore the need for a reasonable balance, less risky investments as one gets older, and the received wisdom that equities perform best over the long term.
"The most common investment choices would be mixed-asset funds with a combination of equities and bonds," Tso says. "In general, though, the key for MPF members is not to try to time the market by making frequent switches. That way, they can end up buying high and selling low."
The skill comes in not over-reacting to short-term trends, while also not putting too much trust in historic performance. Scheme providers may produce all manners of charts and graphs for their websites, updates and annual reports, but Tso stresses that data on past performance is "definitely not" a reliable guide to future prospects.
"Investors should look at the rolling average returns to identify the trend, rather than taking one, three or five years as a specific measurement period - that could be misleading," he says.
That is why a regular annual review is so important, making sensible adjustments possible without trying to catch every market turn. With the ECA, it is also a prompt to compare the fees, growth achieved and recent performance of alternative providers offering similar funds.
A long-time adviser on various aspects of the MPF project, Tso says there is still plenty of scope for improvements. More complex areas, such as including an element of medical cover, will require long and detailed debate. Others like the scheme's "PR", which has a significant bearing on public perceptions, can perhaps be tackled more easily.
"The public image of the MPF system could be enhanced," Tso says. "The general feeling about it is still not that positive, with many investors saying, for example, that the fees are too high and returns are not good enough. We should also mention that MPF members do not generally appreciate all the good points of the system, its availability, and how it helps them save steadily for retirement."
The message, of course, for individual savers is to make the best of what's there - something many still fail to do. Time taken to review and rebalance present holdings could, in many cases, lead to markedly better annual returns. And the chance of using the scheme for voluntary savings remains a viable but largely under-explored option.