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The HK government has gazetted 1 April 2017 as the commencement date for the MPF legislation providing for the default investment strategy (DIS). The original target commencement date, which was the end of 2016, was postponed following the introduction of additional provisions to the MPF legislation on expenses caps on DIS funds.
From 1 April 2017, each MPF scheme will offer the DIS as an investment option to its members, and the DIS will become the default investment choice if members fail to give investment instructions. The DIS will be comprised of two mixed asset funds (DIS funds) and aims to achieve automatic de-risking for members according to their age through automatic asset re-allocation between the two DIS funds. The DIS funds will be subject to statutory limits on service fees (0.75% p.a.) and recurrent out-of-pocket expenses (0.20% p.a.), and performance of the DIS funds will be measured against industry-developed reference portfolios.
Before commencement of the DIS, each MPF scheme will issue a pre-implementation notice to all members and employers to provide an overview on the DIS and how the DIS re-investment exercise may impact certain members. Under the DIS re-investment exercise, the accrued benefits of certain members who meet the specified criteria may be re-invested in the DIS. In this connection, within six months from the launch of the DIS on 1 April 2017, a DIS re-investment notice will be issued to those members, who will be given a period of 42 days to give their investment choice, failing which their accrued benefits will be transferred into the DIS within 14 days of the expiry of the reply period.
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