MPF Employee Choice Arrangement
Employees contributing to the Mandatory Provident Fund (MPF) Scheme can now make a once-yearly transfer of their employee’s portion of mandatory contributions and investment returns, known as “accrued benefits”, in their contribution accounts to an MPF trustee and scheme of their choice. This option, which gives employees more autonomy in handling their MPF investment, is available under the MPF Employee Choice Arrangement (ECA) which came into effect on 1 November 2012.
For accrued benefits from former employment or self-employment in employees’ contribution accounts, employees can also transfer them to their choice of trustee and scheme. For voluntary MPF contributions, the existing governing rules of individual schemes apply.
While the ECA gives employees a choice, it is not compulsory to make a transfer. So, employees who are satisfied with the current trustee and scheme of their contribution accounts need not make any changes at all.
In addition, the ECA does not impact self-employed persons, who are already enrolled in an MPF trustee and scheme of their choice.
Employers’ Rights and Obligations are Unchanged with ECA
There is no change to the employers’ administrative arrangements for their employees’ MPF. An employer will continue to make contributions to the trustee(s) and scheme(s) chosen for their employees.
In addition, an employer will continue to:
- Choose and join one or more MPF trustees and schemes for their employees
- Enrol new employees in the MPF scheme(s) that has/have been chosen
- Assess or review the performance of the trustees and schemes chosen, and if necessary, consider switching to others to cater to the needs of the company or employees
The ECA will not affect the employers’ administrative arrangements for off-setting severance or long-service payments. The accrued benefits from the employer’s portion of contributions cannot be transferred by the employees.
How Can Employees Choose their MPF Trustee of Choice under ECA?
If you are planning to transfer the employee’s portion of mandatory contributions in your contribution account to the MPF trustee and scheme of your choice, you should bear in mind the following transfer arrangements under ECA:
- A transfer is allowed once during a calendar year between 1 January and 31 December. However, after you have made a transfer, you need not wait another full 12 months to make the next one – you can apply for another transfer any time during the next calendar year.
- A transfer must be made in one lump sum, not in batches, and not just a part of your accrued benefits.
- The employer is not required to be involved in the transfer process. An employee may contact the trustee of his/her choice directly to arrange the transfer.
A list of MPF Approved Trustees is available online.List of MPF Approved Trustees
Before making a transfer, remember:
- It is not compulsory to make a transfer: The ECA gives employees a choice. It is not compulsory to change your MPF trustee and scheme, if you are already satisfied with the performance and services of your current trustee.
- Take your time to evaluate and select a suitable MPF trustee: Consider four major factors before choosing an MPF trustee/scheme. These are:
- Products (Scheme and fund): Consider whether the fund choices available are adequate and meet your needs
- Services: Compare the range and quality of services offered by trustees
- Fees and charges: Compare fees and charges of funds of the same type
- Personal factors: For example, your personal investment objectives; current life stage (including years to retirement); and risk tolerance level and other savings for retirement
The Mandatory Provident Fund Schemes Authority has set up an Employee Choice Arrangement minisite providing more information and tools to help make a decision.Employee Choice Arrangement minisiteOnline tools to help make a decision
Three major steps to complete a transfer:
1. Complete and submit the Employee Choice Arrangement – Transfer Election Form
You can download the Transfer Election Form or obtain one from any MPF Approved Trustee.Transfer Election Form
2. Trustees buy/sell fund units
There is a process before a transfer is completed, which includes the verification of the information received by both the original and new trustees, before the new one can receive your contributions to invest.
You should note that after the original trustee has redeemed the funds and before the new trustee subscribes new funds, there will generally be a time-lag of about 1 to 2 weeks during which the accrued benefits will not be invested in any fund.
3. Make sure you receive the transfer documents
The original trustee will send you a Transfer Statement while the new trustee will provide a Transfer Confirmation. Check these documents and contact the respective trustee if in any doubt.More on Employee Choice Arrangement