In the first quarter of each year, MPF members receive an annual benefit statement from their MPF provider. Amongst other things, the statement shows the performance of the MPF account over last year, the contributions made to the account and the balance at the year-end. See below for further details. However, the annual benefit statement is not always easy reading, so members should learn how to interpret the information therein to maximize the effectiveness of the statement.
MPF providers are required to send statements at least once a year
According to the Code of Disclosure for MPF Investment Funds, MPF providers are required to issue members with a benefit statement within three months of the end of the scheme’s financial year. Providers generally send statements by mail, and some trustees will also provide quarterly or semi-annual electronic statements. Members of some schemes can opt to receive statements electronically, which not only avoids mailing errors but is also better from an environmental perspective.
Main content of the Annual Benefit Statement
The annual benefit statement includes detailed information on the MPF account over the previous year. Trustees can choose to provide either a "Long Version" or a "Short Version". Both versions of the statement will include the following, (1) a summary of account movements over the year and the fund allocation, (2) account gains/losses since inception, (3) account balances, (4) total contributions made during the year, (5) Details of any transfers-in (which also includes any transfers under the Employee Choice Arrangement (“ECA”), also known as (“MPF Semi-Portability”), (6) total fees charged, and (7) details of any outstanding contributions and/or surcharges.
In addition to the above, the Long Version will also include details of the fees charged for each contribution or transaction made. Further, if the provider offers fee rebates or preferential charges, details will also be reflected in the annual report.
Keep an eye on account balances and contributions made
As per the above, the annual benefit statement contains a lot of information and many members understandably find it difficult to comprehend all the details. Members are advised to focus on several important parts of the statement. Firstly, one should pay attention to the year-end account balance, which encapsulates all contributions made to date, any fund transfers, withdrawals, and investment performance. It also represents how much you have accumulated in terms of your savings for retirement. Members are recommended to verify the contributions paid. Having reviewed the account balance, members can decide whether any additional retirement savings are needed to meet their retirement savings expectations.
Review your investment portfolio to ensure it has the appropriate risk level
It is also worth paying attention to how your investment portfolio is performing. Although the investment market in 2022 has been volatile and ended the year in negative territory, members should evaluate whether their existing fund choices are within their risk tolerance level. Further, members can also compare their investment performance against other providers’ funds of the same type. For example, by referring to the charts available on the MPFA website that summarizes the fund performance of all MPF providers in the HK market, it is possible to see how the investment portfolio is performing versus the market median. Although historical performance is no guarantee of future performance, members should review their investment portfolios regularly to ensure they match their risk tolerance level at different life stages.
Are you ready to review your annual benefit statement?
