Effects of ECA on employers
Before the implementation of the Employee Choice Arrangement (ECA), employees were enrolled in MPF schemes chosen by their employers, who have been the primary target audience of MPF service providers. From an employee’s perspective, the scheme choices available to them are often limited.
With the implementation of ECA, MPF service providers have expanded their promotion efforts to include the employees as ECA has given employees more control over their own MPF benefits by allowing them to transfer their own mandatory contributions to a scheme of their choice once every calendar year. It has allowed better working of market forces and thus enhanced market competition. MPF providers have to differentiate themselves with premium service, solid investment experience, wide fund choices and innovative programmes in order to stand out.
MPF provider’s relationship with employer & employees
Luzia Hung, Chief Executive Officer, Manulife Provident Funds Trust Company Limited
For employers, ECA has no impact on the workflow process because they do not need to be involved in the transfer of accrued benefits and the MPF administrative arrangements handled by them remain unchanged.
For employees, after the implementation of ECA, they have greater autonomy in managing part of their MPF investments. They can now transfer their accrued benefits by contacting a new trustee of their choice directly.
With this autonomy, employees may have higher expectation in terms of the service quality provided by the existing MPF provider and scheme and fund choices available. Therefore, employers can regularly review the MPF service provider’s services and the scheme’s investment performance, and encourage employees to express their opinion on provider’s service and the scheme’s performance.
Ensuring the best outcome for employees and the company
MPF accrued benefits will form part of employees’ personal asset and retirement reserve. Therefore, it is important for employees to know their MPF and manage it actively. Employers can play a key role in facilitating employees’ understanding of the details of their MPF schemes and fund choices available; and the flow of up-to-date market information for employees to make their investment decisions. MPF providers are able to help employers in these areas.
MPF provider’s role in helping employers
MPF providers can organise briefing sessions for employers and their employees to talk about scheme details and fund choices and the latest MPF initiatives and regulation such as phased withdrawal of MPF benefits, early withdrawal of MPF benefits on the ground of terminal illnesses etc. To facilitate the flow of up-to-date market information, MPF providers like Manulife arrange seminars for employers and their employees with investment experts to share the latest market insights and investment views so they can make informed choices.
Some employers may worry about the administrative workload when considering the introduction of a second MPF scheme/service provider. Manulife provides employers with a sophisticated software system which can handle the administrative work of multiple schemes. Our system also gives electronic alerts to employers so they can avoid being penalised for late contribution.
MPF provider’s role in helping employees
MPF service providers can play an important role in enhancing the transparency of MPF information, such as the provision of monthly member benefit statements and fund performance factsheets.
Technology is making MPF management easier for members. With Manulife, the development of an electronic platform enables members to log on to their MPF accounts and gain access to a wealth of account information such as investment risk levels, asset allocation and a summary of MPF account movements. They can also make same-day dealings.
Registered MPF intermediaries also play a key role in helping employees with their financial planning in order to achieve their retirement goals. Manulife has a strong team of more than 5,300 registered MPF intermediaries. They provide excellent customer service and administrative support to handle member enquiries efficiently.
Easing the process of selecting, updating & tracking
Regular investment seminars can be arranged for employers and employees to gain access to up-to-date information on market and fund performance.
Manulife arranges regular meetings with HR leaders to understand their needs and receive feedback on service quality for improvement.
Paul Arkwright
Publisher
