Employer Action Code: Act
Starting November 1, 2012, employees in Hong Kong will have the option once a year to transfer the accrued benefit from their own contributions in their employer’s Mandatory Provident Fund (MPF) plan to a service provider of their own choice, known as an employee choice arrangement (ECA). Employees already have this option for all MPF contributions accumulated from previous employment. They will not have a choice for accrued benefits from their employer’s contributions to the MPF accounts (both mandatory and voluntary).
The Mandatory Provident Fund Authority (MPFA) estimates that with this new flexibility, the proportion of total MPF funds in Hong Kong subject to an employee choice of providers will increase from 39% to 67%. It is anticipated that MPF providers will launch intense marketing campaigns that target employees who have this newfound flexibility. The MPFA hopes greater competition will encourage providers to lower fees and pay greater attention to individual MPF members.
Legally, no employer action is required. However, employers should be prepared to address employee questions about:
- Why an existing provider was selected
- The completion of an ECA transfer
- What information is available to perform a comparison of MPF providers in the market
For further information, please visit Towers Watson's mpfexpress.com.