Asset Management MPF Default Investment Strategy

I. What is Default Investment Strategy (“DIS”)?

The DIS is a default investment arrangement as stipulated in accordance with the Mandatory Provident Fund Schemes Ordinance, MPF members who do not make their own choice of MPF funds, their accrued benefits, future contributions and accrued benefits transferred from another MPF scheme will be invested through the DIS. MPF members can also choose to invest through the DIS.

The DIS is not a fund - it is a strategy that uses two constituent funds, namely the Core Accumulation Fund and the Age 65 Plus Fund (collectively the “DIS Funds”, each as “DIS Constituent Fund”) to automatically reduce the risk exposure as the member approaches retirement age. The DIS funds will invest in a globally diversified manner and invest in different assets (e.g. equities, bonds, money market instruments, etc.). The DIS funds are subject to fee and expense caps as imposed by the legislation.

The DIS is required by law to be in every MPF scheme and is substantially similar in all MPF schemes.

II. What are its features?

A. Automatic De-risking
The DIS will manage investment risk exposure by automatically reducing risk for scheme members as they get older.

The DIS will use two constituent funds (“CFs”) called the Core Accumulation Fund (“CAF”) and the Age 65 Plus Fund (“A65F”). The CAF will hold around 60% assets in higher risk assets, such as global equities, and 40% in lower risk assets, such as global bonds. The A65F will hold 20% higher risk assets and 80% lower risk assets. Such de-risking is to be achieved by way of reducing the holding in the CAF and increasing the holding in the A65F according to the pre-set allocation percentages at different ages as detailed below. Diagram 1 below shows the target proportion of investment in riskier assets over time.

Contributions made by scheme members before age 50 will be fully invested into the CAF. After a scheme member reaches age 50, the trustee of MPF scheme will start automatically moving some investment (around 6.7% of assets) from CAF to A65F according to the allocation percentages in Diagram 2 headed DIS de-risking table. This process will continue until the scheme member reaches age 64 when all assets will be held in A65F.

Diagram 1: Asset Allocation between the DIS Funds according to DIS


Note: The exact proportion of the portfolio in higher/lower risk assets at any point in time may deviate from the target glide path due to market fluctuations.

Diagram 2: DIS De-risking Table

Age Core Accumulation Fund Age 65 Plus Fund
Below 50 100.0% 0.0%
50 93.3% 6.7%
51 86.7% 13.3%
52 80.0% 20.0%
53 73.3% 26.7%
54 66.7% 33.3%
55 60.0% 40.0%
56 53.3% 46.7%
57 46.7% 53.3%
58 40.0% 60.0%
59 33.3% 66.7%
60 26.7% 73.3%
61 20.0% 80.0%
62 13.3% 86.7%
63 6.7% 93.3%
64 and above 0.0% 100.0%

Note: The above allocation between the CAF and A65F is made at the point of annual de-risking and the proportion of the CAF and A65F in the DIS portfolio may vary during the year due to market fluctuations.

For the member invests into DIS of Haitong MPF Retirement Fund, in general, if a member’s birthday is not on a dealing day or specified instructions (including but not limited to subscription, redemption or switching instructions) are already being processed on the member’s birthday, then the investments will be moved on the next available dealing day. When one or more of the specified instruction (including but not limited to subscription, redemption or switching instructions) are being processed on the annual date of de-risking for a relevant member, the annual de-risking will only take place after completion of these instructions where necessary. Please refer to the Explanatory Memorandum for details.

B. Statutory Fee Control
The amount of fees charged to an MPF CF has a significant impact on long-term investment outcomes.

According to the law, the aggregate of the payments for services charged to the CFs in the DIS must not, in a single day, exceed a daily rate of 0.75% per annum of the net asset value of each of the DIS Funds divided by the number of days in the year (including asset based fees paid for service of trustee, administrator, investment fund manager, etc. but not out-of-pocket expenses). The fees for recurrent operational expenses shall not in a single year exceed 0.2% of net asset value of each DIS Constituent Fund.

Members should note that there are a number of attributes of the design of the DIS which affect the types of risks associated with the DIS. For more details on key risks relating to the DIS, Please refer to the Explanatory Memorandum for details.

III. How does DIS affect you?

If you set up a new account in the Haitong MPF Retirement Fund (“Retirement Fund”) on or after 1 April 2017(“Effective Date”) and you do not make any investment choice, your future contributions and accrued benefits transferred from another scheme (collectively, “Future Investments”) and your accrued benefits will be invested in accordance with the DIS. If you have accounts in the Retirement Fund that are set up before the Effective Date (“pre-existing accounts”), depending on whether you have previously made any fund choices, the DIS may affect you in different ways.

If you have already given a valid investment instruction for the accrued benefits and Future Investments in your pre-existing account or you are 60 years old or above before the Effective Date, you will not be affected by the implementation of the DIS.

If all your accrued benefits in a pre-existing account are invested in the existing default arrangement as at the Effective Date and you have not given a valid investment instruction for the pre-existing account, you will receive a separate notice (i.e. the “DIS Re-Investment Notice”) on or before end of September 2017. The DIS Re-Investment Notice will explain that if you do not make an investment choice by replying within 42 days , your accrued benefits in the existing default arrangement will be redeemed in whole and re-invested in accordance with the DIS. Therefore, if you receive the DIS Re-Investment Notice, please pay special attention to the contents and make appropriate arrangements. You should note that the risk of the existing default arrangement may be different from that of the DIS and you may be exposed to market risks as a result of any reinvestment of your accrued benefits in the DIS.

There are special circumstances. Where all your accrued benefits in the pre-existing account are transferred from another account within the Retirement Fund (eg. in the case of cessation of employment where accrued benefits in your contribution account are transferred to a personal account within the Retirement Fund), your accrued benefits in the pre-existing accounting will be invested in the same manner as they were invested immediately before the transfer, but your Future Investments may be invested in the DIS after implementation of the DIS, unless otherwise instructed.

The implementation of the DIS may affect the investment of both your accrued benefits and future contributions. If you are in doubt about the impact of the DIS on your accrued benefits and future contributions, please do not hesitate to contact the Trustee of the Retirement Fund.

For details of DIS of Haitong MPF Retirement Fund, please refer to the DIS Schedule below for further details.

IV. Do you need to do anything?

Apart from the above, there are other circumstances where your accrued benefits or future contributions may be affected by the implementation of the DIS. If you have any query on how the DIS will affect you and what actions you need to take, you should call the Haitong MPF 24 Hours Auto-Info-line at (852) 2500 1600 or the Haitong MPF Employers Hotline at (852) 3663 7288, or visit http://www.htisec.com/asm for more information.

If you receive the DIS Re-Investment Notice after the Effective Date, you are advised to pay special attention to the contents and send your corresponding reply to the Trustee as appropriate.

You are free to choose to invest in the DIS if you agree with its investment strategy and find it suitable for your personal circumstances. The DIS will generally apply as a default investment arrangement after the Effective Date if you do not make an investment choice or do not wish to do so.

V. Management of MPF Accounts

As the DIS represents a major change to the MPF System, it is timely for members to check their account status to make sure their details, particularly date of birth and address details, are up-to-date and also to consider consolidating accounts for ease of their own account administration.

For details of DIS of Haitong MPF Retirement Fund, please refer to DIS Pre-implementation Notice below for further details.

Client Login MPF
  

Haitong International Investment Managers Limited
Member Hotline:2500 1600
Member Fax No.:3409 2688
Employer Hotline:3663 7288
Employer Fax No.:3409 2683

Mailing address:
Member Services, Fund Services Hong Kong, HSBC Institutional Trust Services (Asia) Limited
P.O. Box 73448, Kowloon Central Post Office, Hong Kong.
  • DIS Schedule
  • Download
  • DIS Leaflet
  • E-flyer for Employers


Date Description
December 2016 Haitong MPF Retirement Fund Explanatory Memorandum
January 2017 DIS Pre-implementation Notice will be issued to participating employer and member of Haitong MPF Retirement Fund informing the launch of DIS and the change to the Explanatory Memorandum. Important Note will be available after member login to MPF account.
By end of March 2017 New MPF forms will be available from the website
April 2017 Notification letter will be issued to member whose investment allocation for future contribution is changed to DIS with effect from 1 April 2017.
6th to 13th April 2017 In general, DIS Re-Investment Notice (DRN) will be issued to default investment account member from 6th April 2017 to 13th April 2017. If members are uncertain whether they will receive the DRN, please contact us.

If members want the accrued benefits in the relevant account and future contributions and transfers to stay in vested in the existing constituent funds, members should complete and return the attached Option 2 Form to the trustee of Retirement Fund the within 42 days as set out in the DIS Re-Investment Notice.

The Option 2 Form should be returned to trustee by post or by fax, the details have been set out in DIS Re-Investment Notice. Kindly be reminded to follow the delivery means as provided in order to ensure the reply can be received by trustee within 42 days. Please allow adequate time and affix sufficient postage for postal delivery to the trustee.

Upon receipt of the returned Option 2 Form from the members as specified in the DRN, the trustee of Retirement Fund will issue a letter of confirmation to the members by post. If the members do not receive the confirmation within 7 business days, please contact us.

If member do not make an investment choice by replying within 42 days, the accrued benefits in the existing default arrangement will be redeemed in whole and re-invested in accordance with the DIS.



|   About Us  |   Contact Us  |   Disclaimers  |   Data Privacy Policy  |  
Copyright © 2012 Haitong International Asset Management. All Rights Reserved.Best viewed with Internet Explorer 6.0 or above version only