Mandatory Provident Fund (MPF) plans have a big impact on people’s retirement plans. In the event of market turmoil, many people will choose to consolidate their MPF accounts so that they can manage their investments every year, transfer funds, or choose investment products that are more suitable for them. How to understand “Employee Choice Arrangement”? This article will introduce the details you should know one by one:
What is Employee Choice Arrangement (MPF Semi-Free Travel)?
The Mandatory Provident Fund Schemes Authority (MPFA) launched the “Employee Choice Arrangement” in 2012, which is commonly known as “MPF Semi-Free Travel”. The system allows employees to choose to transfer the accrued benefits of their mandatory contributions to a self-selected MPF scheme once a year, and aims to encourage employees to actively manage their MPF investments.
During the “self-selection” process, employees who have opened an individual account can transfer their previously employed assets from the contribution account to their individual account or contribution account to represent the consolidated MPF account.
However, it should be noted that the employer’s mandatory contributions must remain in the original plan, and the accrued benefits derived from it cannot be transferred.
In other words, employees can only consolidate the accrued benefits in their own personal accounts into the MPF scheme of their choice, or transfer the accrued benefits in the current account to the MPF scheme of their choice, but only for employees Contributions, employer contributions cannot be transferred.
Steps to transfer MPF
First, employees can check the number of MPF accounts they hold through the MPF Annual Benefit Statement and MPF Online Account; they can also download the MPFA “Personal Account Information Enquiry Form” to inquire about all relevant account information.
After knowing the account details, the employee can obtain it from the MPF trustee of his choice, or download the “Employee Choice Arrangement – Transfer Election Form” (Form MPF(S) – P(P)) from the MPFA website. And after considering different factors, choose your favorite trustee and plan.
Finally, just hand the documents to the trustee broker to complete the transfer. If the selected trustee does not have any MPF account, the trustee will first require the employee to set up a personal account and then complete the integration of the accounts.
As a result, the whole process was smooth, and applicants generally received the “Transfer Statement” and “Transfer Confirmation” within two to three weeks to confirm the completion of the integration process.
Factors to consider when transferring MPF?
Before conducting an MPF check, the MPFA reminds applicants to carefully consider the following factors:
• Products (plans and funds)
Are the product choices adequate and tailored to individual needs, the characteristics of the fund, the level of risk and performance? Fund selection is not the more the better, the most important thing is to meet the needs, and the past performance of the fund is only for reference.
Does the trustee provide convenient and diversified channels for inquiring about account information? Is the time it takes for the trustee to process members to switch funds quickly? How many free benefit statements are issued to plan members each year? How many times a year are plan members allowed to switch funds for free?
• Fund fees (comparison with similar funds)
• personal reason
Personal investment goals, current life stage, including years to retirement, risk tolerance and other retirement reserves, etc.