Unit acquisition
On each dealing day, the net asset value per unit ("unit NAV") of the fund is calculated. You can acquire units of a fund at the unit offer price set by the fund provider. The unit offer price of a fund is normally the unit NAV of the fund plus an offer spread charged by the service provider (trustee or investment manager, depending on the charging mechanism agreed between them). Currently, this charge is generally waived in the majority of MPF schemes.
Unit redemption
When you redeem fund units, you are actually selling the fund units back to the fund provider. The fund unit transaction mechanism is more or less the same as that of unit acquisition.
On each dealing day, you can redeem your fund units. The price at which you sell your fund units back is the unit bid price set by the fund provider. The unit bid price of a fund unit is normally the unit NAV of the fund less a bid spread charged by the service provider (trustee or investment manager, depending on the charging mechanism agreed between them). Like the offer spread, this charge is generally waived in the majority of MPF schemes.
Fund switching
Basically, fund switching means you are changing your investment allocation between different funds of an MPF scheme. You are essentially redeeming the units in a constituent fund and investing the proceeds into another constituent fund, both within the same scheme. It involves a pair of unit transactions: (1) redemption of units in the first constituent fund, and (2) acquisition of units in the second constituent fund. Each individual transaction uses the respective dealing mechanism as described above.
Depending on system capacity of individual trustees, some schemes provide further flexibility for fund switching by splitting it into:
| (1) |
redirection - keeping the existing investment in the funds intact and changing only the future investment allocation according to a new fund allocation instruction, |
| (2) |
switching - keeping future investment allocation unchanged and changing only the existing fund unit investments into a new fund mix, or |
| (3) |
a combination of (1) and (2). |
Individual schemes have their own set of requirements regarding fund switching that you have to follow. If you consider switching between funds, you should, among other things, take into account the amount of fees to be charged by the trustee or investment manager, and make sure this is consistent with any fee descriptions in the Fee Table in the offering document of the scheme.
Fund transfer
Fund transfer means you are transferring the accumulated MPF accrued benefits from one scheme to another scheme in the following circumstances:
| (1) |
change of employment - you have to change to the MPF scheme of your new employer, if it's not the same scheme as your last employer, |
| (2) |
change of preserved account - you want to move your MPF savings in a preserved account of one scheme to another scheme of your own choice, |
| (3) |
employer changing scheme - you have to transfer your MPF savings to a new scheme because your employer decides to replace the existing scheme with a new scheme, or |
| (4) |
self-employed person changing scheme - you are a self-employed person and you want to change your MPF savings to another scheme. |
When doing a fund transfer, you are basically redeeming fund units from the old scheme and using the proceeds to acquire fund units in the new scheme.
There are some statutory requirements for fund transfers. Your trustee, be it the transferor trustee (whose scheme you are transferring your MPF savings from) or the transferee trustee (whose scheme you are transferring your MPF savings into), will require you to follow some procedures in order for the transfer to be successful.
Fund withdrawal
Fund withdrawal means you are qualified to withdraw cash from your MPF savings. You are only qualified to withdraw cash under the following conditions:
| (1) |
retirement at 65, |
| (2) |
qualify for early retirement, |
| (3) |
death, |
| (4) |
permanent departure from Hong Kong, |
| (5) |
total incapacity, or |
| (6) |
small balance. |
As in doing a fund transfer, you have to follow certain statutory requirements from your trustee when doing a withdrawal.
For details, please refer to sections 159 to 165 of the Mandatory Provident Fund Schemes (General) Regulation.
When you withdraw from a fund, the fund unit redemption process is the same as fund transfer described above. Please note that the amount of cash you finally receive may be smaller than the value of your units because of relevant fees charged or other deductions or adjustments made according to the scheme rules. Make sure you clarify any difference with your trustee, and check to ensure any difference is in line with fee descriptions in the Fee Table in the offering document, or the scheme rules.
