Hong Kong electricity company CLP Holdings takes a “mindful” approach to introducing new investment choices in its Group Provident Fund Scheme (GPFS), according to Chief Financial Officer Nicolas Tissot.
GPFS is one of the largest private pension plans in Hong Kong, managing more than US$1 billion of assets for 4,000 members.
The defined-contribution pension plan currently offers 25 types of investment choices, ranging from diversified lifestyles funds, specialist funds, money market funds, and fixed deposits.
“From time to time, we review our fund range and sustainability, and would bring in options as and when appropriate,” Tissot says in an interview with Asia Asset Management. “We’re mindful that it would not be efficient to have so many options that the total assets under management allocated to them become too low, and therefore costly to members.”
He says it’s “not practical” to offer alternative investments in a defined-contribution plan because they are not typically priced and tradeable on a daily basis.
Tissot says CLP does not try to time the market and defers to its investment professionals to make asset allocation decisions.
“Our lifestyle funds have a set of strategic asset allocation benchmarks, and a rebalancing policy is in place so that the funds are aligned with the designed risk and return characteristics,” he says.
He says CLP employees can stay in the GPFS for another ten years after retiring, which allows them to pick their optimal time to exit the pension plan.