Frequently asked questions on MPF

By Employers:

  • What factors should employers consider when choosing an MPF service provider?
  • What is the difference between a bundled and an unbundled service?
  • What types of fees do employers pay?

By Employees:

  • What types of fees do employees pay?
  • What should employees consider when choosing MPF funds?
  • How will MPF provide for my retirement needs?
  • What protection does MPF offer?
  • How can employees assess capability of MPF fund managers?

What factors should employers consider when choosing an MPF service provider?

1.  Product features and benefits
   Information found in the Scheme's Offering Documents can be used for comparison, including:

  • Operations and principals of schemes
  • Choice and objectives of constituent funds
  • Investment policy and restrictions
  • Fund valuation methods and frequency
  • Restriction or flexibility of contributions, withdrawals, and switches
  • Fees and charges
  • Reports and accounts
  • Notification requirements for participants and fund holders


2.  Investment performance and expertise

Although past track record is not indicative of future performance, you can assess the credibility and capability of the fund manager by reviewing the consistency and absolute performance of similar funds managed by the fund manager.

3.  Client servicing

Many employers find that efficient administrative and client servicing support are essential to the smooth running of the scheme and keeping costs down.

4.  Employee education

Initial and ongoing communication and education programs to employees on how MPF can help employees achieve their retirement goals, what type of MPF fund are suitable for their needs, and regular updates on fund managers' latest investment performance and strategy.

What is the difference between a bundled and an unbundled service?

Unit trusts offer individual investors a simple and effective way to invest and build wealth over time. Key benefits include:

1.  Bundled Service

  • A collective arrangement where a single company or provider offers an integrated service by pooling together capabilities from different partners, such as:
    • client administration

    • fund management

    • trustee service

  • Provides one stop shop convenience to employers
  • Sometimes with greater cost efficiencies


2.  Unbundled Service

  • No collective arrangement of various services
  • Each company provides a service based on their area of expertise
  • More flexibility for employer and employee to decide which provider can best serve their needs
  • Employers and employees should use the criteria set out above to decide which service best serve their needs - in terms of investment results, client-servicing support, cost efficiencies etc.

What types of fees do employers and employees pay?

General types of fees include:

  • Custodian
  • Trustee
  • Fund management

Please refer to the "Fees and charges" section of the Scheme's Offering Documents for details.
In addition, employers and employees should note the following:

Frequency of fee payment

  • one off, monthly, or annual

Timing of payment

  • on entry into scheme
  • at redemption
  • on switching between funds


Paid by whom


Calculation method

  • Flat fee or percentage of net asset value
  • At what level: constituent fund vs. approved pooled investment funds (APIFs)

What should employees consider when choosing MPF funds?

One key characteristics of MPF is that it is a defined contribution plan and the onus is on the employee to select the appropriate fund(s) that best match his/her investment objective.

You may consider these personal circumstances when choosing a MPF fund:
Years to retirement
How many years will you be investing in MPF before you redeem your MPF portfolio at the retirement age of 65
You should consider the impact that inflation has on your retirement nest egg, and compounding effect that your investments will have over the long term
As a general guideline, the longer you have until retirement, the more risk you can afford to take and hence your portfolio can focus more on growth oriented equity funds
Likewise, the closer you are to retirement, you may wish to preserve your retirement nest egg and opt for a more conservative type fund focusing on bonds
Life cycle need
What are your priorities at various stages in life in relation to your investment goals
Especially relevant to your voluntary contributions
Retirement goal
How much do you need to enjoy a comfortable retirement
Risk tolerance
All investments have risks
Consider the investment objective and scope of the fund and how much the related price fluctuation is going to affect you
Again, one can normally afford to invest in growth oriented funds with a higher price volatility if one has a long term investment horizon

How will MPF provide for my retirement needs?

Employees should not rely solely on MPF to provide for their retirement needs - it is only one of the solutions to ensure financial security for the community in old age. It complements benefits paid out from Social Security and private savings.
For MPF to work successfully, there should be a relationship in which employers and employees work as partners in preparing for employees' retirement.
Also, it requires employees to make informed decisions regarding contribution rates and asset allocation across available options. These decisions have a direct impact on the level of money they can accumulate for retirement. To ensure that they can make informed decisions, the industry and the providers should provide very extensive employee education, in particular to enable them to understand, among other things:
what are the key sources of retirement income
how to set goals for retirement income
what is the effect of inflation on retirement buying power
what is the implication of life style and expected life span on retirement income

What protection does MPF offer?

The MPF Ordinances and guidelines provide several layers of protection to protect members' scheme assets, and specific measures on trustees/service providers are only one of the many layers.

Safety Net, incl.
trust structure, ensure separation of scheme assets
capital and expertise requirements of trustees/service providers (not only initial, but also on-going proactive monitoring)
internal control requirements
professional indemnity insurance
compensation fund
In addition, there are regulations on:
Investment e.g.
investment standards and restrictions
forbidden investment practices
Marketing Activities, e.g.
regulation of intermediaries
approval of marketing material
publish investment results
Remedies of Non-compliance, e.g.
indemnify losses
corrective and remedial action

How can employees assess capability of MPF fund managers?

From the first quarter of 2001, HKIFA has, on a regular basis, been publishing MPF performance data.

Apart from reviewing fund performance data, employees can look at the fund house's investment expertise, in particular, its experience and track record in retirement fund management.

In addition, they can take reference from the performance of other types of funds, such as authorised unit trusts and mutual funds or Hong Kong retirement funds, especially over a longer time frame, say over 3, 5, 10, 20 years. But it must be noted that these data can be used for reference only because:

1.  these funds' investment objectives, policies as well as restrictions and guidelines may not necessarily be the same as those of the MPF, and
2.  past performance data are not indicative of future performance.

Apart from returns, they should look at the volatility of the funds to have a more balanced picture.

(Note: At present, the HKIFA website has performance data of authorised funds.)

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