V. MPF Schemes and Investment 強積金計劃及投資

The MPFA registers MPF schemes and approves funds, while the SFC handles the relevant product authorisation, disclosure and regulation of investment managers. Their codes complement each other, and certain changes to offering documents still require the SFC’s prior approval after a product has been authorised.

An MPF scheme and its constituent funds are different levels of the investment arrangement. Schemes are classified as employer sponsored schemes, master trust schemes or industry schemes, while constituent funds hold members’ investments of contributions and accrued benefits.

Constituent funds are investment funds within an MPF scheme for members’ contributions and accrued benefits, subject to requirements on investment choice, pricing and disclosure. Their assets, risks and guarantee conditions differ, particularly between MPF Conservative Funds and guaranteed funds.

Features of Constituent Funds · Types of Constituent Funds

The Default Investment Strategy uses two mixed assets funds, combining automatic age-based de-risking, statutory fee caps and global diversification for members who make no fund choice or actively select it. Automatic de-risking guarantees neither capital nor returns, and does not apply to standalone selections of its constituent funds.

What is the DIS? · Rules and Procedures Applicable to Investment through the DIS · Key Risks Relating to the DIS

Approved pooled investment funds are underlying funds in which constituent funds may invest, requiring MPFA approval and SFC authorisation. They currently take the form of unit trusts or insurance policies, with insurance policies required to be Class G policies issued by authorised insurers.

Approval of Pooled Investment Funds · Types of Pooled Investment Funds

MPF legislation requires a statement of investment policy to be prepared and maintained for every constituent fund and approved pooled investment fund, helping members understand how the fund intends to invest. It must explain the objectives, asset and market allocation, overall risk and expected return, and the relevant policies on futures, options and securities lending.

MPF investment regulation protects members through requirements for investment managers, permissible assets and portfolio operations. Distinguish the three separate 10% limits, the rules for borrowing securities and money, and the minimum 30% Hong Kong dollar currency exposure for constituent funds.

Investment Management · Permissible Investments · Other Investment Restrictions · Hong Kong Dollar Currency Exposure

MPF fees fall broadly into asset-based fees, lump sums and event-based fees; their general level is mainly driven by market competition, subject to disclosure requirements and specific restrictions. DIS constituent funds have fee and expense caps, MPF Conservative Funds have special charging restrictions, and the MPF Fund Platform helps members compare fees and investment performance.

Members can choose and switch constituent funds within their MPF scheme; transfers between schemes depend on whether the employer changes schemes, business ownership changes, employment ends or the Employee Choice Arrangement applies. Transfers must not attract member fees or financial penalties, except qualifying necessary transaction costs.

The Code on Disclosure for MPF Investment Funds helps employers and scheme members understand schemes, funds, charges and performance through consistent disclosure. Candidates should distinguish the purposes, contents, deadlines and exemptions of the five disclosure tools.

The MPFA uses on-site and off-site supervision to examine trustee governance, investment compliance, custody arrangements and individual MPF fund performance. It assesses investment breaches and ensures proper rectification, appropriate compensation for affected members and/or funds, and effective measures to prevent recurrence.