Home 6 Major Decision Points on MPF Investment Types of MPF Funds 5 Thing to look out for in Your Retirement Investment Useful Tools & Resources
Choosing FundChoosing SchemeAdditional ContributionsChanging JobFund Choices AdjustmentAfter Retirement Overview of Fund Types Planning for Retirement at Different Stages of Your LifeEstimating Your Retirement NeedsAccumulating Wealth for Your RetirementReviewing Your Retirement Investment PortfolioWithdrawing Your Retirement Savings Tools and Documents on MPF investmentTools on Retirement ManagementMultimedia ZoneFeature ArticlesPublications And LeafletsSocial Media PlatformsGlossaryUseful Link


Accrued Benefits (累算權益)

This is the amount of a scheme member's beneficial interest in an MPF scheme, including sums derived from contributions made by both the scheme member and his/her employer, together with any investment return on the contributions. The accrued benefits are reduced if there is an investment loss, and increased with an investment gain. Accrued benefits are shown in the Annual Benefit Statement.

Annual Benefit Statement (周年權益報表)

The Annual Benefit Statement is the key to understand a scheme member’s MPF accounts. It includes information about the accrued benefits, contributions and investments in an MPF account during the past year, including contributions, transfers, transactions, account balances, benefits accrued and the extent to which they are vested, and the gains and losses of the account.

Approved Trustee (核准受託人)

Approved trustees, also known as “MPF trustees” or “trustees”, administrate and operate MPF schemes. All trustees are approved by the MPFA in accordance with the Mandatory Provident Fund Schemes Ordinance and are subject to the Ordinance. There is a “MPF Approved Trustees” section in the MPFA website, from which scheme members can easily obtain information on all approved trustees.

Asset Allocation (資產分配)

Asset allocation involves allocating savings (contributions and investment returns) into different types of assets, such as stocks, bonds, bank deposits or cash, with the aim of balancing the risks and returns of different assets. Scheme members should allocate their assets according to their personal circumstances, particularly their risk tolerance level.

Asset Classes (資產種類)

This refers to particular types of investments, such as stocks, bonds, bank deposits or cash. Generally, investments in the same class of assets share similar characteristics, such as similar risk levels in the market place. The performance of individual investment in the same asset class, however, may vary due to various factors specific to that investment.

Bid Spread (買入差價)

When a trustee redeems fund units at the scheme member’s request, the fee which the trustee charges the scheme member is called the bid spread. The bid spread for a transfer of MPF benefits can include only necessary transaction costs incurred in selling or buying investments for the transfer. The bid spread is not applicable to MPF Conservative Funds and is waived by most trustees currently.

Bonds (債券)

Bonds are an investment which offers fixed interest as a return to investors. Bond issuers can be international organizations (e.g. World Bank, Asian Development Bank), governments, quasi-governmental bodies, private corporations, etc. Investors who purchase bonds (“bond holders”) can be regarded as lenders, who lend funds to the bond issuer. The bond issuer pays interest to the bond holders for a set period of time. At the end of this period, the bond issuer pays the bond holders back the amount invested and interest (if any).

Contribution Charge (供款費)

This is the amount charged by a trustee to a scheme member against any contributions paid to the scheme, which is usually a certain percentage of the contribution amount. The charge is not applicable to MPF Conservative Funds and is waived by most trustees currently.

Compounding Effect (複息效應)

This refers to the snowball effect created by generating investment return from previous investment return. When you invest an amount (principal) in an asset, the principal generates interest, which is their reinvested together with the principal to generate more interest.

The table below shows what happens if a young person starts making a monthly investment of $1,000 towards his or her retirement savings from the age of 20. Assuming that the annual net return rate is 5%, after 20 years of investment plus investment returns, he or she will have accumulated some $410,000 by the age of 40 due to the compounding effect. If the investment horizon is as long as 40 years, by the time he or she reaches 60, some $1,530,000 will have been accumulated. Although this investment horizon is only double the former, the additional amount accrued is almost three times as much! Similarly, the higher the monthly amount invested in retirement savings, the higher the amount that is accumulated due to the compounding effect.

Total value compounded for different investment horizons with an assumed annual net return of 5%:

10 Years 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
$1,000 $160,000 $270,000 $410,000 $600,000 $840,000 $1,140,000 $1,530,000
$3,000 $470,000 $810,000 $1,240,000 $1,790,000 $2,510,000 $3,420,000 $4,600,000
$5,000 $780,000 $1,340,000 $2,060,000 $2,990,000 $4,180,000 $5,700,000 $7,660,000

Constituent Fund (成分基金)

Refer to MPF Schemes

Diversification (分散投資)

When you diversify, you put your savings (contributions and accrued benefits) into various investments across asset classes in different geographical regions in order to spread the overall risk. Investment risk is affected not only by the types of investment (e.g. stocks, bonds or cash), but also by changes in the social, political or economic situation (including interest rate changes, credit ratings, stock market volatility and the performance of different industries) in the region where the investment is made. Generally, under the same circumstances, the risk is higher if a fund invests in only one particular country or region compared to investing in many different countries or regions. That is to say, diversification across regions or markets tends to lower the investment risk.

Debt Securities (債務證券)

These are debt instruments, such as bonds, structured notes, commercial paper or debentures, issued by governments, quasi-governmental bodies or large corporations to raise capital.

Dollar Cost Averaging (平均成本法)

This is an investment approach adopted for MPF investments. Scheme members make a fixed monthly contribution to buy fund units at the market price. When the unit price goes up, fewer units are purchased; when the unit price drops, more units are purchased for the same amount. In the long run, by averaging out the costs of fund units over time, this approach reduces the effects of short-term market fluctuations on investments and avoids the need for scheme members to speculate on market trends.

Fee Table (收費表)

This table shows the fees and charges of each MPF scheme. The format of the fee table is standardized across different trustees in order to help scheme members easily compare the fees and charges of different trustees and schemes. The fee table is enclosed with the MPF Scheme Brochure.

Forward Pricing (未知價)

MPF funds are traded on a “forward pricing” basis. This means that the execution price of funds is calculated on the basis of their net asset value divided by the number of fund units at the end of the relevant trading day. Therefore, scheme members cannot specify the price of a fund when buying or selling fund units, and the execution price may be higher or lower than the last available price known at the time the buy/sell order was made.

Fund Expense Ratio (基金開支比率)

The Fund Expense Ratio (FER) indicates the total expenses charged by an MPF fund as a percentage of the fund size. It is shown in the Fund Fact Sheet provided by trustees. The higher the FER of a fund is, the higher the operating expenses the fund incurred in the previous year, which results in a reduction in the investment return of the fund. Moreover, as fees and charges are generally the main component of fund expenses, the FER also reflects the fee level of the fund. Scheme members should note that the FER of a fund is calculated based on data from the previous financial period, so it does not reflect any adjustment of fees, charges or expenses in the current financial period.

Fund Descriptor (基金類型描述)

This is a simple description of a fund, including the fund type (e.g. stocks, bonds, or mixed assets), its investment objectives and policies, the maximum exposure to stocks (applicable to mixed assets funds) and the geographical regions the fund invests in. The fund descriptor is shown in the Fund Fact Sheet.

Fund Fact Sheet (基金便覽)

The Fund Fact Sheet is like a résumé of funds, listing the key information of each fund, such as fund size, investment objectives, portfolio allocation, main holdings in the portfolio, fund performance, fund expense ratio, fund risk indicator, risk class and fund commentary (market review and/or outlook) for each constituent fund in a scheme. Trustees are required to issue at least two Fund Fact Sheets to their members for each financial year of a scheme. One of these Fund Fact Sheets must be provided with the Annual Benefit Statement (i.e. within three months after the end of each financial period of the scheme). The other must be distributed within the 7th and 8th month after the end of the financial period of the scheme.

Fund Risk Indicator
(基金風險指標 / 風險標記)

The Fund Risk Indicator, provided in the Fund Fact Sheet, shows the risk level of an MPF fund. It is an important reference when a scheme member considers whether to invest in a fund, because generally, there is a trade-off between risk and investment return: a fund with higher risk level tends to show greater volatility in returns than a low-risk fund. It also has the potential to offer higher expected return than a low-risk fund. Its downside potential is increased similarly.

Investment Objective (投資目標)

The investment objective is usually stated in the MPF Scheme Brochure, describing whether a fund aims to preserve capital or achieve higher returns. The asset allocation and investment instruments of the fund are also set out in the brochure for scheme members to consider whether the investment objective and fund portfolio match their needs.

Key Scheme Information Document (主要計劃資料文件)

The Key Scheme Information Document uses plain language, charts and tables to present and disclose key information (e.g. fund choice, fees, contribution, transfer, withdrawal) of an MPF scheme in a standardized format. Access to other documents containing detailed information of an MPF scheme (e.g. the MPF Scheme Brochure) is provided by web link or QR code.

MPF Schemes (強積金計劃)

MPF schemes are administrated and operated by approved trustees. Each approved trustee may operate one or more MPF Schemes. Each MPF scheme provides scheme members with a choice of funds, which are primarily categorized by different risk levels as MPF Conservative Funds, Guaranteed Funds, Bond Funds, Mixed Assets Funds or Equity Funds. These are all generally known as “constituent funds”. All MPF trustees, schemes and constituent funds must be approved by the MPFA.

MPF Scheme Brochure (強積金計劃說明書)

The MPF Scheme Brochure is like a user guide to an MPF scheme and its funds, providing interested scheme members with detailed information about the scheme and funds. It contains information about the operation of the MPF scheme, the investment objectives of the constituent funds, risks that may affect fund performance, the contribution and benefits withdrawal procedures, fees and charges, warnings, and other important issues.

Offer Spread (賣出差價)

When a trustee subscribes to fund units as per a scheme member’s request, the fee which the trustee charges the scheme member is called the offer spread. The offer spread for a transfer of MPF benefits can include only necessary transaction costs incurred in selling and buying investments of that transfer. The offer spread is not applicable to MPF Conservative Funds and is waived by most trustees currently.

On-going Cost Illustration (持續成本列表)

The on-going cost illustration converts the latest fund expense ratio (FER) figure into dollars and adds that to any direct charges that a scheme member might pay (contribution charge, offer spread, etc.). The sum illustrates the dollar cost of investing $1,000 in different MPF funds over periods of one, three or five years. To standardize the comparison, an annual 5% gross return and a constant FER per year are assumed in the calculations.

Out-of-market Risk (間斷市場風險)

The transfer of MPF benefits between trustees involves the buying and selling of units in funds. The transfer process generally involves an investment time-lag of one to two weeks between the time when the trustee of your original scheme redeems the units in funds and the time when the trustee of your new scheme subscribes to units in new funds for you. During this period, your MPF benefits will not be invested in any fund. Since fund prices may change due to market fluctuations during this period, there is a chance of “selling low, buying high”. Be mindful of this risk before making a transfer.

Personal Account (個人帳戶)

This is an account which holds a scheme member’s accrued MPF benefits derived from previous employment (including contributions and investment returns) and/or that from his/her current contribution account if he/she has exercised the transfer right under the Employee Choice Arrangement. Unlike contribution account, new contributions to this account are generally not accepted (except special voluntary contributions), but the existing MPF benefits accrued in this account will continue to be invested according to the account holder’s instructions, and incur fees and charges.

Portfolio (投資組合)

This is a collection of investments owned by an investor. It may include stocks, bonds, bank deposits, etc.

Risk Class (風險級別)

The Risk Class, provided in the Fund Fact Sheet, shows the risk level of an MPF fund. A Risk Class is assigned to each MPF fund according to the seven-point risk classification as shown in the table below based on the fund risk indicator of the fund. The higher the Risk Class, the higher the risk of that fund.

Risk Class
Fund Risk Indicator
Equal or above Less than
1 0.0% 0.5%
2 0.5% 2.0%
3 2.0% 5.0%
4 5.0% 10.0%
5 10.0% 15.0%
6 15.0% 25.0%
7 25.0% -

Stocks (股票)

Stocks are shares in company ownership. They are issued by a company to raise capital without increasing its debt. The returns on investing in stocks come mainly from capital growth and dividends. Since both are affected by market sentiment and the company’s performance, investing in stocks generally involves a higher risk than investing in money market instruments or bonds.

Special Voluntary Contributions (特別自願性供款)

Special voluntary contributions (SVC) are made by employees in addition to the mandatory contributions. Unlike voluntary contributions, SVC are unrelated to employment. They are paid directly by a scheme member to the trustee of an MPF scheme without the employer’s involvement. Withdrawal of benefits is not subject to employment status or the preservation requirements of the MPF account under current employment.

Target Date Fund (also called Life Cycle Fund)
(目標日期基金 / 人生階段基金)

This is a type of mixed assets fund which automatically reduces risk when scheme members get closer to retirement. A growth portfolio (i.e. higher risk) is adopted in the earlier stages with the aim of achieving higher returns. As the target retirement date gets nearer, however, a more conservative portfolio (i.e. lower risk) is adopted to preserve the existing benefits accrued under the fund. Some Target Date Funds are named by their target retirement year (e.g. “2040 Fund”).

Tax Deductible Voluntary Contributions

A scheme member who wishes to make tax deductible voluntary contributions (“TVC”) should open a TVC account in an MPF scheme and make contributions directly to the scheme. Only contributions that are made to the TVC accounts are eligible for tax deduction under salaries tax or tax under personal assessment. To meet the purpose of encouraging extra savings for retirement, a TVC account holder can only withdraw the TVC upon reaching age 65 or on other statutory grounds.

Transferor Trustee (轉移受託人)

This is the trustee of an MPF scheme from which a scheme member’s accrued benefits are to be transferred to another scheme.

Transferee Trustee (承轉受託人)

This is the trustee of an MPF scheme to which a scheme member’s accrued benefits are to be transferred from another scheme.

Unit Acquisition (購入單位)

This is the act of a scheme member buying fund units from a trustee or a fund administrator. It is made on a “forward pricing” basis, which means that the execution price of the fund is calculated on the basis of its net asset value divided by the number of fund units at the end of the relevant trading day. (Refer to Forwarding Pricing (未知價))

Unit Redemption (贖回單位)

This is the act of a scheme member selling fund units to a fund provider. Just as with a unit acquisition, a unit redemption is made on a “forward pricing” basis, which means the execution price of the fund is calculated on the basis of its net asset value divided by the number of fund units by the end of the relevant trading day. (Refer to Forwarding Pricing (未知價))

Volatility (波幅)

Volatility is the change in price of a fund, a stock or a bond. It reflects the difference between the potentially highest and lowest return of a fund, a stock or a bond. Generally, an investment with smaller change in price over time has lower volatility and usually involves lower risk. Volatility is one of the common benchmarks for measuring investment risk.

Voluntary Contributions (自願性供款)

These are contributions made by employers or employees in addition to the mandatory contributions, with the aim of increasing employees’ retirement savings.

Withdrawal Charge (權益提取費)

This is the amount charged by a trustee to scheme members when they withdraw their accrued benefits from the scheme. The charge usually equals a certain percentage of the withdrawal amount and is deducted directly from the withdrawn benefits. It is not applicable to MPF Conservative Funds and is waived by most trustees currently.