MPF Default Investment Strategy at a glance
What is MPF Default Investment Strategy (DIS)?
The DIS is a ready-made investment arrangement that complies with the key principles of retirement investment. It addresses the concerns about the high fee levels of MPF funds and scheme members’ difficulties in making fund choices. The DIS has three key features:
- Automatic reduction of investment risk according to members' age
- Fee cap: management fees and out-of-pocket expenses must not be over 0.75% and 0.2% of the net asset value of the funds per year
- Globally diversified investment strategy
The DIS is required by the Mandatory Provident Fund Schemes Ordinance to be offered in every MPF scheme starting from 1 April 2017. If you have not given your trustee any investment instructions, your accrued MPF benefits will be re-invested according to the DIS of your scheme. Scheme members can also choose to invest their MPF benefits either according to the DIS or in the individual funds under the DIS.
How does the DIS work?
The DIS consists of two mixed assets funds:
- Core Accumulation Fund (more higher risk assets), and
- Age 65 Plus Fund (more lower risk assets).
The DIS automatically adjusts the proportion of these two funds when a scheme member approaches retirement age.
I have already selected MPF funds, can I change my investment options to invest in the DIS?
Yes. If you think the DIS is suitable for you, you can instruct your trustee to invest your MPF according to the DIS or invest in the individual funds under the DIS after it launches in April 2017. Please contact your MPF trustee for detailed arrangements. Before making any investment decisions or changing your investment options, you should consider your own risk tolerance and financial circumstances, and understand the features and risk of the funds to make sure the investments are suitable to you.
How would DIS affect me if I have not given any investment instructions?
Your MPF assets may be affected. If you are under 60 years old and your MPF accrued benefits are being invested according to the default arrangement of your scheme as of the DIS effective day, your trustee will send you the "DIS Re-investment Notice" within six months after the launch of the DIS. You can complete the form enclosed in the Notice to opt out from the DIS. But if you do not respond within the specified reply date, your accrued MPF benefits and any future benefits (subject to some specific exceptions under the law) put into your account will be re-invested according to the DIS of your scheme. Members should take this opportunity to review your MPF and make appropriate investment decision.
What should I do when I receive the DIS documents from the trustees?
The DIS involves legislative changes and it may affect your MPF investment. You can choose to invest in the DIS or other funds in your own choices. Read the DIS notices or documents carefully. Contact your trustee (hotlines of all trustees) if you have any questions.