MPF members should think thoroughly about their investment objectives before finalising their portfolio, says Peter Crewe, sales and marketing director and assistant vice-president of AIA Pension and Trustee, which covers more than 300,000 members in its pension schemes.
The need for careful planning is highlighted by the dismal performance of growth-orientated funds since the MPF was introduced in December 2000.
More than 60 per cent of the total of 290 MPF investment funds offered by the 20 service providers recorded a negative return, according to the Hong Kong Investment Funds Association.
Defenders of the retirement scheme caution members against passing hasty judgement on the MPF's merits, saying the poor track record can be attributed to the downturn in global stock markets. They advise investors to take a long-term view, avoid the temptation to time the market and instead let the cumulative effects of dollar cost averaging take effect.
Although the inaugural year of the MPF scheme has been a rocky ride for some, industry experts say there will be several changes in how service providers structure their product offerings in the coming months. One major change is an expected consolidation in the highly concentrated MPF market among the 20 main players.
'We now have more than 320,000 members in our pension block of business. Pension has become a significant business line for us, and more people have become our clients through the MPF relationship,' says Alan Ng, assistant vice-president of sales and marketing for Manulife (International) Individual Financial Product and Provident Funds.
David Hatton CEO of ING Pension Services Ltd and ING Pension Trust, says a reduction in competition among service providers may have a number of fringe benefits.
