The Employee Choice Arrangement has arrived, so workers may move the money in their Mandatory Provident Funds, but with restrictions. They may move only their own contributions, not the money paid by their employers, and they can do so only once a year.
Hongkongers have reacted to the liberalisation with ambivalence. People definitely want the freedom to move and, in particular, to push back on perceived poor service from their current MPF providers. But investors also complain that the new fund-switching reforms are too complicated and don't go far enough.
If you ask investors what irks them most about MPFs, the focus is on the poor service of their current (employer-selected) fund providers. In October, the Consumer Council highlighted MPF fund providers' high fees and low returns.
"I will definitely shift my provider, as the service is so poor," says a television reporter who requested anonymity. She is frustrated with the lack of information she receives from her MPF provider. "I get an annual statement, but no other information. There is no brief, no investment advice and no additional information," she says. "The other providers may not be very good, but I would like to change providers just to show I'm unhappy."
Mydy Lai, a hairdresser, likewise grouses about the quality of service seen with his MPF. "I rang the hotline for some information, and that was a terrible experience. I had to input many keys and follow a lot of instructions before I could talk to a real person. When I did, they were not familiar with the scheme," he says. Lai says he would compare the fees and service quality of other providers before deciding on a switch.
Simon Wong, a driver, also feels strongly about the data issue. "I have asked for information about my account and found that it is not easily obtained. The provider gives you only a statement and a hotline number. It usually takes a long time for anyone to pick up the phone," he says.
Wong does not have internet access at work and complains that many providers information only via the web.
"The providers should pay attention to all employees, including those who do not have computer access. They should employ more people on the hotlines," Wong says.
"I usually get most of my MPF information from the newspaper," Wong says, noting that a subscription costs less than the MPF fees he pays.
Wong says he'd like to switch providers, "but I do not have much knowledge about which one to choose. Maybe the others offer the same poor service."
Sandy Lu, an accountant, says she would consider a shift, but finds the process of changing schemes unwieldy. She notes the arrangement lets workers switch contributions only once a year and that the employer contributions will stay with the existing scheme, causing a split fund.
"It's so complicated and I still need to deal with the old provider. It's ridiculous," Lu says. She says the government should make employers pay contributions to funds selected by employees.
The Mandatory Provident Fund Schemes Authority has promised to let employees transfer their entire MPF portfolios, including the contributions by employers, but says it first needs to address a raft of administrative issues. It warns that the freedom to make a full transfer will not happen soon.
The authority is also looking into another major consumer peeve - fees. In May, consulting firm Ernst & Young released a survey indicating Hong Kong's MPF funds charge higher fees on pension plans than those in Singapore, Australia and Britain.
Tony Leung, who works in estate management, says he would consider changing his MPF provider based on fees. "MPF providers are offering similar funds and services. I would choose the one with the lowest fees," Leung says. "It is hard to compare the service quality, but easy to find out which charges the lowest fees."
Kenny Lee Yiu-sun, chief executive of First China Securities, says most funds return in line with the market. Furthermore, a fund that performed well in the past may not perform well in the future. He views fees as a key to fund selection. "I may not choose the fund with the lowest fee," he says, "but I want to invest in an MPF fund that offers the best value for money."