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Preparing members for launch of ECA

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The Mandatory Provident Fund Schemes Authority stepped up its investment-focused educational initiatives in recent years to prepare the working population to take greater control of the management of their pensions.

'These initiatives will help prepare employees for the launch of the employee choice arrangement (ECA), which will give MPF scheme members the option of transferring their accrued benefits from their own mandatory contributions to a trustee of their choice. It will also help employees address their accumulating wealth, and the ageing population plan better for their long-term retirement,' Cynthia Hui Wai-yee, the MPFA's executive director (supervision), said.

In the last financial year the aggregate net asset value of all MPF schemes reached HK$317.3 billion, up 46 per cent from the same period a year earlier. There are currently 19 approved trustees and 38 registered schemes.

The launch of the ECA will depend on the strengthening of existing regulations governing MPF intermediaries. A public consultation on the issue is scheduled for the end of the year or early next year with the hope that legislation to tighten regulations will be passed next year.

'We expect the launch of the ECA will trigger more selling activities to individuals. [To protect] scheme members, we think it is a better and more prudent approach to strengthen our supervision of intermediaries first,' she said.

The authority will also provide guidance to financial intermediaries on selling and marketing activities, and train them on proper selling conduct. It will complete its current round of on-site visits to all trustees and investment managers of MPF funds, and develop best practices on investment compliance arrangements.

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