i. Subject to fee caps
The aggregate of the payments for services specified in section 34DD(2) of the MPF Ordinance of the CAF and A65F must not, in a single day, exceed a daily rate (being 0.75% per annum of the net asset value of each of these two Constituent Funds divided by the number of days in the year).
For out-of-pocket expenses incurred by the trustee on a recurrent basis in the discharge of the trustee’s duties to provide services in relation to each of the CAF and A65F, shall not in a single year exceed 0.2% of the NAV of each of the CAF and A65F.
ii. De-risking based on members’ age
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. When a member is below the age of 50, all existing accrued benefits and all contributions and accrued benefits transferred from another scheme will be invested in the CAF; when a member is between the ages of 50 and 64, all existing accrued benefits and all contributions and accrued benefits transferred from another scheme will be invested according to the allocation percentages between CAF and A65F as shown in the DIS De-risking Table (see Diagram 2 below). The de-risking on the existing accrued benefits will be automatically carried out as described above; when a member reaches the age of 64, all existing accrued benefits and all contributions and accrued benefits transferred from another scheme will be invested in A65F.
For a deceased member, de-risking will cease once the trustee has received proof of the death of the member to the trustee's satisfaction. If de-risking has already been taken place between the death of the member and the time at which the trustee received the satisfactory proof of such death, such de-risking will not be undone, although no further de-risking will take place in respect of the deceased member.
Diagram 1: Asset Allocation between Constituent Funds in the DIS
| |
Note: |
The exact proportion of the portfolio in Higher Risk Assets/Lower Risk Assets at any point in time may deviate from the target glide path due to market fluctuations. |
Diagram 2: DIS De-risking Table
| Age | Core Accumulation Fund (“CAF”) | Age 65 Plus Fund (“A65F”) |
|---|
| Below 50 |
100.0% |
0.0% |
| 50 |
93.3% |
6.7% |
| 51 |
86.7% |
13.3% |
| 52 |
80.0% |
20.0% |
| 53 |
73.3% |
26.7% |
| 54 |
66.7% |
33.3% |
| 55 |
60.0% |
40.0% |
| 56 |
53.3% |
46.7% |
| 57 |
46.7% |
53.3% |
| 58 |
40.0% |
60.0% |
| 59 |
33.3% |
66.7% |
| 60 |
26.7% |
73.3% |
| 61 |
20.0% |
80.0% |
| 62 |
13.3% |
86.7% |
| 63 |
6.7% |
93.3% |
| 64 and above |
0.0% |
100.0% |
| |
Note: |
|
| |
(i) |
The above allocation between the CAF and A65F is made at the point of annual de-risking and the proportion of the CAF and A65F in the DIS portfolio may vary during the year due to market fluctuations. |
| |
(ii) |
Switching of the existing accrued benefits among CAF and A65F will be automatically carried out each year on a member’s birthday and according to the allocation percentages as shown in the DIS De-risking Table as shown in Diagram 2 above. If the member’s birthday is not on a Business Day (i.e. a day (other than Saturday) on which banks in Hong Kong are open for normal banking business provided that where, as a result of a Number 8 Typhoon Signal or higher or a black rainstorm warning or other similar event, the period during which banks in Hong Kong are open for normal banking business on any day is reduced, such day shall not be a Business Day unless the trustee otherwise determines), then the investments will be moved on the next available Business Day. |
| |
(iii) |
When one or more of the specified instructions (including but not limited to subscription, redemption, switching or withdrawal instructions) are being 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 will only take place after completion of these specified instructions. |
iii. Globally diversified investment
Both constituent funds adopt globally diversified investment principles and use different classes of assets, including global equities, fixed income, money market and cash, and other types of assets allowed under the MPF legislation.
