One message about the Mandatory Provident Fund (MPF) that scheme providers and financial advisers have consistently sought to hammer home is the need to think long term. It is a lesson that certainly bears repeating in a city where the trader mentality often focuses more on quick deals and short-term gains. But now, with the local workforce fully attuned to the idea of making regular MPF contributions and looking to more distant time horizons in accumulating a nest egg for retirement, the emphasis in terms of education and awareness is understandably beginning to shift. Since the scheme's introduction, there has been a general tendency for members to 'forget' their MPF investments. In a sense, that was perhaps not too surprising because of the comparatively small amounts set aside each month and the consequent limited rates of growth. Now, though, with the average sum in member accounts close to HK$100,000, industry leaders are keen to encourage individuals to take a closer interest in monitoring their investments and thereby maximise the benefits available to them. Jason Sadler, managing director of insurance business in Hong Kong for HSBC Insurance (Asia), stressed there was no reason to let things drift. He explained, in particular, the importance of assessing, if necessary with a professional adviser, all the factors relevant to one's retirement planning. This entailed not simply reviewing investment performance, but establishing a clear position on appetite for risk, additional voluntary contributions, expected lifestyle and expenditure in retirement, and taking advantage of dollar cost averaging in volatile markets. 'Every situation is different and, of course, age is one of the key factors,' Mr Sadler said. 'But you have to adopt a strategy, and that depends on looking into the totality of assets and income streams you will have to fall back on.' It remained something of an ideal, he said, because Hongkongers were not proactive in managing their MPF accounts, and many still appeared to be unfamiliar with their basic options. 'When they join, a significant percentage of people don't even fill in the enrolment form properly,' Mr Sadler said. 'Typically, that means their investments are all diverted to the low-risk, lower capital return funds, so they are not getting the returns needed to build a nest egg over a period of 25 to 40 years.' He added that only about 10 per cent of members were making additional voluntary contributions, and an estimated 90 per cent did not seem to realise they could move preserved accounts when leaving an employer. As a result, some people now had two or three preserved accounts with different providers, though the mechanism for consolidating them with one preferred provider was straightforward, by doing so, overall returns would be better. 'Awareness is growing, but there is some way to go on the education front,' Mr Sadler said. 'We still need a joint effort by the Mandatory Provident Fund Schemes Authority and companies to make sure customers fully understand their choices.' Legislative changes amending the MPF ordinance were set for implementation in November, but most were procedural rather than structural. The main aim at this stage was to streamline, for example, the process for handling unclaimed monies and to eliminate the 30-day grace period for payment by employers. More significant, he said, would be the introduction of other suggested refinements, which were at various stages of examination. Foremost among them were the issue of member choice of service provider superseding employer choice, and further improvements in automation and the use of technology for transfers between providers. At present, that process was still 'very manual' involving written forms, verifying signatures and taking as long as 30 days to complete. 'I firmly believe member-choice will be the next big step, and I hope it is sooner rather than later,' he said. 'It needs to go through the regulatory approvals, but it will be good for members and for the industry.' For further clues on how local retirement-related thinking may evolve in the next few years, it is instructive to keep a close eye on trends in the United States and Europe. Hong Kong employees still think fundamentally about working hard until retirement, then stopping completely, and aiming to have sufficient financial resources to leave a tidy sum to the next generation. A series of HSBC surveys had shown that new patterns were emerging in developed western economies, revealing new priorities and changing mindsets. More retirees, for instance, were considering part-time jobs to remain active or to have a subsidiary income; parents felt less obligation to leave a legacy once they had put their children through college; and 'reverse mortgages' on paid-off properties were being used to supplement pensions. 'The definition of retirement has changed,' Mr Sadler said. 'Some of these ideas haven't taken hold in Asia yet, but they might well come.'