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MPF Default Investment Strategy to be launched on 1 April
MPFA urges scheme members to learn about the details

The Default Investment Strategy (DIS) will be launched on 1 April 2017. Starting on that day, each of the 32 Mandatory Provident Fund (MPF) schemes must offer a DIS for MPF benefits without investment instructions. Scheme members can also proactively choose to invest through the DIS or its two funds.
 
The DIS is an investment solution comprising two mixed assets funds: the Core Accumulation Fund (CAF) and the Age 65 Plus Fund (A65F). The strategy has three features: it automatically reduces the investment risk according to a member’s age; it has fee caps and it adopts a globally diversified investment approach.
 
Dr David Wong, Chairman of the Mandatory Provident Fund Schemes Authority (MPFA), said, “The DIS standardizes existing default investment arrangements, which are now different among the various schemes. It is an investment solution for scheme members who do not know how to manage, or are not interested in managing, their MPF, and is designed with reference to suggestions from experts from the Organisation for Economic Co-operation and Development (OECD), as well as overseas experience. The DIS is a strategy suitable for long-term retirement investment and is subject to fee caps. It helps address scheme members’ concerns about the difficulty of making fund choices and high fee levels.” 
       
According to the information provided by trustees, there are now about 610,000 MPF accounts with no investment instructions, involving MPF assets of approximately $8.2 billion.
 
The DIS legislation will come into effect on 1 April 2017. According to the new legislation, the trustees are required to re-invest all accrued MPF benefits that do not have any investment instructions according to the DIS, instead of the current default investment arrangement. They are also required to provide these affected account holders with an opt-out arrangement. The trustees will send out a DIS Re-investment Notice (DRN) to holders of accounts with no investment instructions1 within six months after the launch of the DIS.
 
Those who do not want to invest through the DIS must complete the Option 2 Form enclosed in the DRN and return it to their trustee on or before the date specified in the DRN (the 42nd day after the issuance of the DRN). Otherwise the MPF in their account will be re-invested through the DIS within 14 days after the specified date. Those who agree to invest through the DIS do not need to take any action.
 
Mrs Diana Chan, Managing Director of the MPFA, urges scheme members to read the DRN from their trustee carefully. “The DRN is an important statutory document. In addition to the DIS logo, the envelopes in which the DRN will be sent will have the words ‘Statutory Notice, Please Read’ printed on them to help scheme members identify them easily.”
 
The new legislation also stipulates that after 1 April 2017 all new MPF benefits without investment instructions will be invested according to the DIS. For details of the impact of the new legislation on scheme members, please refer to the Annex.
 
“The MPFA calls on all scheme members to ascertain the number of accounts they have and the investment instructions given for each account. They should also read all the DIS-related notices carefully and pay attention to the information provided by the MPFA. Scheme members should also learn more about this new DIS product. If they have any questions regarding their MPF accounts or investment instructions, they should contact their trustees as soon as possible,” said Mrs Chan.
 
To tie in with the launch of the DIS, the MPFA has set up a DIS thematic website on which a list of DIS funds will be published on 1 April 2017 for scheme members to learn more about the DIS arrangement and the fee levels. The MPFA will continue to roll out publicity programmes through various media outlets to introduce the DIS and the impact of the legislative changes on scheme members.


MPFA Chairman Dr David Wong (centre), Managing Director Mrs Diana Chan (left) and Head (Trustees Supervision) Mr Joseph Lee (right) explained the impact of the DIS on different MPF account holders at today’s press conference.

-Ends-

21 March 2017


1Excluding account holders who turned 60 before 1 April 2017

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Last Review Date: 23/10/2017