Since the introduction of the Mandatory Provident Fund eight years ago, fund administrators and trustees have repeatedly emphasised one point: it is all about taking a long-term perspective. Particularly in a year when slumping global markets have weighed down fund performance and caused the relative value of many portfolios to tumble, that basic message to scheme members remains more important than ever. Despite their reputation for being financially savvy, Hongkongers still paid too little attention to proper post-retirement planning. They typically failed to think through even fundamental issues relating to such things as lifestyle expectations in their later years, how far their projected MPF payouts would stretch, and the reliability of other sources of income. 'That's why we encourage people to start looking at their life goals pre-retirement as much as in retirement, and make them aware that the mandatory level of contribution is generally not enough to support the lifestyle they want to have,' said Alan Merten, vice-president for employee benefits with Manulife (International). An in-house HSBC study in May on attitudes towards MPF also revealed a surprising degree of detachment. It found that about one third of respondents had never even reviewed how their MPF contributions were being allocated across funds, and about half had never spoken to a financial adviser about retirement planning. 'Overall awareness has increased, but people are still laissez-faire in their approach and not proactive enough when it comes to looking after their MPF money,' said Jason Sadler, managing director of insurance business in Hong Kong for HSBC Insurance for Asia. In this respect, he felt that the introduction of member choice would be a step in the right direction. Expected to come into effect next year, it will allow employees to choose the scheme provider to manage their employee contributions, but not to move those made on their behalf by an employer. As proposed, it would be possible to change provider once a year. 'This will encourage individuals to take more responsibility and ownership of their member contributions,' Mr Sadler said. 'It is a positive step, but the industry and the [MPF Schemes] Authority will have to look seriously at procedures for the transfer of monies between providers.' A priority was to shorten the 30 days allowed for transferring accounts and to create an efficient system of electronic instructions. Providing more education on the practicalities was also necessary, with emphasis on the MPF as being only one element in retirement planning for most people in Hong Kong. Mr Sadler said scheme members should meet with a financial adviser and make sure they knew how much they had accumulated, how their contributions were invested, and what their options were. In contemplating a change of provider, the decision should take full account of three fundamentals: the level of trust, the range of information and services available, and fund performance. 'Financial strength and security is a scarce resource in the current market,' Mr Sadler said. 'You want someone you know is going to be here in 20 or 30 years when you want to withdraw your money. The fund performance is obviously important, but also ask yourself how many choices you need. In the overall context of MPF money, most Hong Kong people want to invest in markets that are familiar. Stock market corrections will occur but shouldn't be a major concern for individuals. What people should realise is that planning for retirement is always a long-term thing, and equities are still a valid investment instrument.' While conceding that the economic situation in recent months was 'the most extreme many of us have seen', Mr Sadler was quick to point out that, on a five-year cycle, the majority of equity funds were still up. Moreover, the principle of dollar cost averaging meant that MPF investors, by making regular monthly savings, were in a position to benefit from market troughs as well as peaks. 'Essentially, the core message is not to react too much,' Mr Merten said. 'This is just one of those ugly periods you have to ride through. It is time in the market as opposed to timing the market that ultimately counts, so play it that way.' He said over the past 20 years, the Hang Seng index had seen compound growth of 8.6 per cent per annum. And, while past performance was no guarantee for the future, he firmly believed that equities gained over time. In view of that, he cautioned against switching reflexively between funds. Hasty decisions might only serve to lock in actual losses and cause investors to miss out potential gains when the market revived.