 ith the assistance of an external consultant, the Board of Trustees of the Hospital Authority Provident Fund Scheme (HAPFS) has thoroughly reviewed the HAPFS's structure and asset allocation strategy. A basket of reforms will be introduced to provide members with more choice and flexibility.
1. Opening up of the money market fund
The money market fund will be made available as a fund choice to all members. However, to forestall a sudden and significant switch into this new fund choice, which would have a destabilising impact on other funds, the percentage of switched out proceeds that could be switched into the money market fund will initially be capped at 20%. Members aged 55 and above, and those within five years of their normal retirement will not be subject to such a restriction. In the other direction, members may switch out of the money market fund without restriction (so long as the switching frequency has not exceeded the allowed limit as discussed below). This applies also to existing holders of the HSBC Global Money Fund (Hong Kong dollar), who have previously exercised an irrevocable option to switch into the Fund.
2. Addition of two fund choices: "Global Equity" and "Global Bond"
Together with the opening up of the money market fund, this will provide a broader range of investment choices to cater for members with very different risk appetite.
3. Multiple fund choices
While the investment spectrum has been extended at both ends, it will be risky to put all the investment under the HAPFS in an extreme choice. For this reason, the HAPFS will allow members to split their investment into different funds, in multiples of 10%.
4. Separate asset switch from investment mandates for future contributions
This flexibility caters for members who wish to adopt different risk profiles for their existing holdings and their future contributions.
5. Increase switching frequency from once per year to once per quarter
This change is introduced in response to members' preference for more switching. However, members are advised to use the additional switches wisely and to refrain from unproductive market timing activities.
The existing Capital Guaranteed Fund (CGF) will expire on 30 September 2009. While some members express interest in this fund choice, the financial landscape has changed significantly after the global financial crisis. The terms offered by prospective guarantors are much less favourable than the existing CGF. Moreover, credit ratings of many financial institutions have been downgraded, exposing investors to greater credit risk of the guarantor. Trustees have therefore decided that it would not be in the best interest of members to launch a new CGF now. The HAPFS has written to all CGF holders, requesting them to switch into another fund choice before the deadline of 23 September 2009.
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