Understand the DIS better
The DIS represents a major reform of the MPF System. Its aim is to provide scheme members with better retirement protection. The DIS also addresses scheme members’ concerns about the high fee levels of MPF funds and the difficulties in making fund choices.
Upon the commencement of the new legislation, if, for any reason, scheme members do not give their trustee an investment instruction for their MPF benefits (for example, because they do not know how to or are not interested), their MPF benefits will be invested automatically according to the DIS. Other scheme members, if they find the DIS suits their personal needs, can also choose to invest their MPF benefits either according to the DIS or in the individual funds under the DIS.
The DIS is a ready-made MPF investment solution. It is made up of two mixed assets funds. Scheme members can choose to invest their MPF benefits according to the DIS if they find the DIS suits their personal needs. The launch of the DIS involves changes to the MPF legislation. Please click here for more information on the DIS.
As with other investments, investing according to the DIS will involve investment risks.
The two constituent funds used by the DIS are mixed assets funds. Neither capital nor returns are guaranteed. However, the two constituent funds adopt a globally diversified investment approach by investing in different asset classes in different proportions. The DIS also reduces members’ exposure to higher risk assets as they approach retirement age. Such an approach to asset allocation, along with the feature of automatic reduction of investment risk according to members’ age, can help reduce different types of investment risks over a long contribution period.
Please refer to the MPF Scheme Brochures of the individual MPF schemes for information about the risks associated with the DIS in each scheme.
Fees of the DIS
- management fees (including fees for trustee, investment manager, etc.): not more than 0.75% per annum of the net asset value of the fund (calculated on a daily basis).
- recurrent out-of-pocket expenses (including annual audit fee, printing expenses and postage, etc.): not more than 0.2% per annum of the net asset value of the fund.
To find out the fees and charges of the DIS under individual MPF schemes, please contact your relevant trustees.
Automatic reduction of investment risk according to members' age (or "Automatic de-risking")
The relevant information is available in the MPF Scheme Brochures of the individual schemes. Please contact your trustee for more information.
The automatic de-risking is developed with reference to the experiences of various countries and regions in pension operations, current industry practices, and analysis by the Organisation for Economic Co-operation and Development (OECD).
Many other factors have also been taken into consideration, such as the need to avoid the impact of any drastic market downturn on members when they are close to retirement, the number of fund adjustments in the de-risking process, the impact of unpredictable market volatility, the general retirement age of scheme members, and the average life span of scheme members.
However, if you invest in the two funds as a fund choice instead of according to the DIS, the automatic de-risking will not apply. In these circumstances, you can specify the proportion of the two funds at your wish, as permitted by the governing rules of the scheme.
Investing in the DIS
Yes. You can set up your own investment portfolio by investing your benefits partially or wholly in CAF, in A65F, and in other funds. Investing in CAF and/or A65F as a fund choice rather than as part of the DIS gives you the benefit of fee caps, but the feature of automatic reduction of investment risk according to members’ age will not apply.
Subject to the governing rules of individual schemes, you may invest according to the DIS and also invest in the CAF or/and the A65F in the same MPF account concurrently. Please contact your trustees for more information.
Performance of the DIS
Reference portfolios for both the Core Accumulation Fund and the Age 65 Plus Fund have been developed by the MPF industry together with asset management experts and index providers, for comparing fund performance. The two portfolios have been recognized by the MPFA.
The two reference portfolios are available on the website of the Hong Kong Investment Funds Association (HKIFA). For enquiries about the reference portfolios, please contact the HKIFA (please refer to its website www.hkifa.org.hk for contact details).
The reference portfolios have been set up to facilitate comparison of the performance of the Core Accumulation Funds (CAFs) and Age 65 Plus Funds (A65Fs) in individual schemes.
If the return of a CAF or A65F shows a material difference from the return of the relevant reference portfolio over the same period, the trustees are required to give a brief description of the reason for this difference in the fund fact sheet.