3. How does DIS affect member?
If you have accounts in the Scheme that are set up before the Effective Date ("pre-existing account"), depending on whether you have previously made any fund choices, it may affect you in different ways:
- If you have already given a valid investment instruction for the accrued benefits and Future Investments in your pre-existing account or you are 60 years old or above before the Effective Date, you will not be affected by the implementation of the DIS.
- If all your accrued benefits in a pre-existing account are invested in the existing default fund (BCOM MPF Conservative Fund (prior to 1 June 2008) and the BCOM Stable Growth (CF) Fund (on and after 1 June 2008 but before 1 April 2017) (each, the "Relevant Existing Default Fund") of the Scheme) as at the Effective Date and you have not given a valid investment instruction for the pre-existing account, you will receive a separate notice (i.e. the “DIS Re-Investment Notice”) sent to you on or before the end of September 2017. The DIS Re-Investment Notice will explain that if you do not make an investment choice by replying within a specified period, your accrued benefits in the Relevant Existing Default Fund will be redeemed in whole and re-invested in accordance with the DIS. Therefore, if you receive the DIS Re-Investment Notice, please pay special attention to the contents and make appropriate arrangement. You should note that the risk of the Relevant Existing Default Fund may be different from that of the DIS and you may be exposed to market risks as a result of any reinvestment of your accrued benefits in the DIS.
- There are special circumstances. Where the accrued benefits in the pre-existing account are transferred from another account within the Scheme (e.g. in the case of cessation of employment, where accrued benefits in your contribution account are transferred to a personal account within the Scheme), your accrued benefits in the pre-existing account will be invested in the same manner as they were invested immediately before the transfer but your Future Investments may be invested in the DIS after the implementation of the DIS, unless otherwise instructed.
4. Can I change my mind after the
arrangement of DIS?
Yes. You can change
anytime for your investment portfolio to invest in other constituent funds.
5. What is the risk of the DIS? Can get what kind of return?
Like general investment, the use of DIS will also involve investment risk. DIS is a not a guaranteed investment manner and there is no guaranteed of return.
However, DIS adopts a globally diversified manner to invest by using two constituent funds in different proportions of investment in different types of assets, and gradually reduce the proportion in higher risk assets to reduce risk depending on member’s age. In the long term, this asset allocation and de-risking strategy may help mitigate the risks. Risks relating to the DIS can be found in the relevant section of the offering document / advertising publications of the Scheme.
6. Do I have same risk and return whatever I choose the DIS from different trustee?
The DIS in each MPF scheme shall adopt similar investment manner and set out similar investment objectives. However, return may be different for scheme members based on following factors:
- Different asset allocation, investment types and investment region
- Different fees and charges; and
- Different age and date of birth of scheme members which the time of adjusting investment allocation may be different.
7.What is the investment of DIS? What are the investment of CAF and A65F? Are return of CAF and A65F guaranteed?
The DIS uses two constituent funds, namely the Core Accumulation Fund (CAF) and the Age 65 Plus Fund (A65F).
- CAF: will invest around 60% in higher risk assets, mainly equities, with the remaining 40% in lower risk assets such as bonds.
- A65F: will hold only invest around 20% in higher risk assets and around 80% in lower risk assets.
Both CAF and A65F are subject to the general investment risks and does not guarantee capital repayment nor positive investment returns.
For further details including the product features, investment policies, investment objectives, charges and risks involved, please refer to the MPF Scheme Brochure. You can obtain the Brochure through visiting http://www.bocomtrust.com.hk or calling our Customer Service Hotline at 223 95559.
8. Can I select CAF or A65 separately?
Yes. CAF and A65 are available as an investment choice itself, for members who find it suitable for their own circumstances. Members should be aware that de-risking will not apply where the member chooses CAF and A65F as individual fund choice (rather than as part of the DIS).
9. Is there any age restriction to invest BCOM Age 65 Plus Fund?
No. Member at any age can select BCOM Age 65 Plus Fund.
10. What is the “Annual de-risking”?
Accrued benefits invested through the DIS will be invested in a way that adjusts risk depending on a member’s age. The DIS will manage investment risk exposure by automatically reducing the exposure to higher risk assets and correspondingly increasing the exposure to lower risk assets as the member gets older. Such de-risking is to be achieved by way of reducing the holding in the CAF and increasing the holding in the A65F over time. The asset allocation stays the same up until 50 years of age, then reduces steadily until age 64, after which it stays steady again.
11. When will trustee arrange annual de-risking for me?
The de-risking mechanism will be operated when member reaches the age of 50. Under normal circumstances, switching of the existing accrued benefits among CAF and A65F will be automatically carried out each year on a member’s birthday. If the member’s birthday is not on a Valuation Date, then the investments will be moved on the next available Valuation Date.
12. Will annual de-risking be deferred under specific circumstances?
If the member’s birthday is not on a Valuation Date, then the investments will be moved on the next available Valuation Date. If the member's birthday falls on the 29th of February and in the year which is not a leap year, then the investments will be moved on 1st of March or the next available Valuation Date. If there is any exceptional circumstance, e.g. market closure or suspension of dealing, which makes it impossible for the investments to be moved on that day, the investments will be moved on the next available Valuation Date.
When one or more of the specified instructions (including but not limited to subscription, redemption / withdrawal or switching instructions) are received prior to or on the annual date of de-risking for a relevant member and being processed on that date, the annual de-risking may be deferred and the annual de-risking will only take place after completion of these specified instructions.
13. Can I select the date of processing annual de-risking? If no, why?
No. De-risking for each relevant member will generally carried out on a member’s birthday. Members should be aware that the de-risking operates automatically regardless of the wish of a member to adopt a strategy which might catch market upside or avoid market downside.
DIS is mainly designed for those members who are not interested or do not wish to make a fund choice. If members would like to actively manage his portfolio, other constituent funds and DIS are also available as an investment choice itself, for members who find it suitable for their own circumstances.
14. Should trustee get my approval before processing annual de-risking?
No. The law has stipulated that trustee should switch the fund for member. Relevant information is set out in the offering document of the Scheme.
15. Should trustee inform me by written notice before processing annual de-risking?
No. It is because processing time of annual de-risking of the DIS are set out in the First and Second Addenda of the Principal Brochure of the Scheme.
However, trustee will, to the extent practicable send a notice to relevant member at least 60 days prior to his/her 50th birthday informing the commencement of annual de-risking process.
16. How do trustee process annual de-risking if my HKID card only show the year of birth?
Trustee will assume your date of birth as the last calendar day of the year (i.e. 31 December) in the absence of other evidence to prove your date of birth, and will use such date to arrange de-risking for you.
17. How do trustee process annual de-risking if the trustee does not have the full date of birth of the relevant member?
If only the year and month of birth is available, the annual de-risking will use the last calendar day of the birth month, or if it is not a Valuation Date, the next available Valuation Date.
If only the year of birth is available, the annual de-risking will use the last calendar day of the year, or if it is not a Valuation Date, the next available Valuation Date.
If no information at all on the date of birth, member’s accrued benefits will be fully invested in A65F with no de-risking applied.
18. What are the charges of DIS?
The DIS Funds are subject to fee and expense caps as imposed by the legislation.
- Management fees (including trustee fee, investment management fee and so on): must not, in a single day, exceed a daily rate of 0.75% per annum of the net asset value (“NAV”) of each of the DIS Funds divided by the number of days in the year.
- Out-of-pocket expenses (including annual audit expenses, printing, postage expenses and so on): will not in a single year exceed 0.2% of the NAV of each of the DIS funds.
19. If I transfer in or transfer out my accrued benefit to other MPF scheme after select DIS, is there any extra charge?
Trustees are generally not allowed to charge any fees or impose any financial penalties for the transfer of accrued benefits.
20. Will Fund Expense Ratio (“FER”) of DIS exceed 0.95%? If yes, what is the reason?
Items included in the fee and expense caps are not the same as those included in the FER. For example, the expense cap only includes the recurrent expenses but the FER includes non-recurrent out-of-pocket expenses. There is no guarantee that the FER of the DIS will not exceed 0.95%.
Members should note that out-of-pocket expenses that are not incurred on a recurrent basis may still be charged to or imposed on the CAF and the A65F. Such fees are not subject to the statutory caps.
21. I am 61 years old now and have not given a valid investment instruction for the accrued benefits. What is the effect of implementation of the DIS?
For existing members aged over 60, their contributions and accrued benefits will not be affected by the DIS. Unless you have made a new investment instruction, your accrued benefits and Future Investments will stay invested in the existing default fund.
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