Money Moves

Choosing simplicity

by Rachel Sproston

Retirement experts make MPF funds allocation straightforward for everyone

Luzia Hung, general manager and head of employee benefits
HSBC Insurance (Asia-Pacific) Holdings Limited
Photo: Nolly Leung

Hong Kong's Mandatory Provident Fund (MPF) initiative has made the news recently for several reasons. Primarily, legislation related to MPF is changing and these changes are hitting the headlines. Additionally, the MPF providers are now aggressively competing for clients' preserved accounts and investing heavily to ensure clients feel satisfied and suitably protected for retirement.

Luzia Hung, general manager and head of employee benefits, HSBC Insurance (Asia-Pacific) Holdings Limited explains the status quo regarding MPF. "In 2000 when the MPF came into force, some people did not fill in any fund allocation instructions possibly because they were busy or perhaps unfamiliar with the scheme, resulting in incredibly slow growth."

According to Ms Hung, one in four people still fail to give any fund allocation instructions today. She says, "This is a terrible wasted opportunity especially for people in their twenties and thirties. Younger people should avoid switching funds when the market dips and the fund price goes down," she advises. In her eyes this would be an opportunity to mop up even greater numbers of shares which have the potential for future growth. "You only want the market to go up when it's time you withdrew your funds," she adds.

Careful choice

Caution must be exercised as clients age however, and the percentage of a person's entire MPF investment allocated to more conservative funds should increase in line with a person's age. "The redemption date is key," explains Ms Hung. "If you are almost ready to retire you should be choosing more conservative funds to cushion any market volatility and protect your assets," she says.

For instance, the two established HSBC MPF plans are SuperTrust and SuperTrust Plus, with the latter offering a larger range of fund choices. Each plan requires the customer to make fund choices, which may however be inconvenient for certain people.

Experts at HSBC have analysed the benefits of changing fund allocations depending on clients' ages and sensitivity to risk and introduced a third plan — SimpleChoice — an MPF plan to suit people who would rather leave the fund allocation to the experts at HSBC. "If you change your mind and decide to overrule our system, it is not a problem," she notes. Customers wishes are followed until their instructions are cancelled, and in the absence of any instructions, age and risk are considered and investment choices are made on behalf of customers to maximise their retirement wealth.

Take control

Unbeknown to many Hong Kong residents is that moving MPF providers is now the individual's choice for those who have changed jobs since 2000. Since this date, three months after quitting any job in Hong Kong, MPF funds automatically become a preserved account and people have the choice of where to put that money. "Therefore, although your current employer chooses your current MPF provider and that remains beyond your control, you have total power over any preserved accounts," Ms Hung says.

HSBC has realised this and remains the market leader in complete MPF provision. "Our strengths lie in the fact that we take care of the entire administration and investment management process. We don't outsource, so if customers have a query, we deal with it directly," Ms Hung says. HSBC also offers consolidated banking services including an array of investment and insurance products and services to maximise client wealth. In essence, with one click, a customer has a snapshot of his or her entire investment portfolio online including current accounts, mortgages, investments, credit facilities, insurance and retirement provisions.

Regarding a career with HSBC Insurance, Ms Hung underlines the flexibility of choice. "In an institution as sizeable as HSBC, the scope for vertical and lateral movement is immense," she says, adding that staff need to consider their preference for "people or paper", and this consideration may take up to 10 years.

"We have a study corner in the office where people are encouraged to take half an hour out of their daily routine to prepare for upcoming exams," she says. "On the whole at HSBC, promotion and personal growth are lauded and rewarded because satisfied people make the best service providers."

Taken from Career Times 25 April 2008, p. A2
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