With effect from 1 November 2012, The Employee Choice Arrangement allows employees to transfer their accrued benefits—the accumulated contributions and investment returns from their current employment—to another MPF trustee and scheme of their own choice once every calendar year if they so wish.
A survey just conducted by Towers Watson, in association with the University of Hong Kong, acknowledged the commonly held sentiment that existing MPF arrangements are insufficient, but suggested that since appointing their MPF provider most employers have not reviewed whether this provider is still meeting the objectives of both employer and employee. However, it found that employees are willing to save more given the right incentives and that over 50% of employers would consider reviewing their providers in light of the ECA.
The survey revealed that most employees and employers do not have sufficient knowledge about MPF and retirement planning and that most employees still do not understand the fundamentals of the ECA. According to the Mandatory Provident Fund Schemes Authority (MPFA), HR should be helping staff by:
• Providing employees with the name of the original trustee and scheme and the relevant employer identification number for the ECA Transfer Election Form—Form MPF (S) – P (P).
• Considering offering more than one MPF trustee and scheme for employees to choose from so that employees can select the MPF services and funds that best suit their needs.
• Reviewing the services of the selected trustees regularly and seeking their employees’ opinions to better understand the performance of these trustees.
• Learning more about the ECA and if the employer has arrangements for voluntary contributions, helping the employees learn about the rules for transferring accrued benefits derived from such contributions and answer related queries.
• Referring to leaflet ‘MPF 7 Smart Tips for Smart Employers’ for more information on the MPF rights and obligations of employers.
Paul Arkwright
Publisher
