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PCCW converted a defined-benefit scheme to DC in November, 2005. It already had a DC scheme as well, with terms more generous than available under Hong Kong's Mandatory Provident Fund system. Fidelity Investments was its sole DC provider, offering members a range of lifestyle funds.
Until recently, however, most employees had participated in the DB plan, which involved six fund managers investing in a benchmark that was 75% equities. That scheme had become severely underfunded following three years of bear markets and in 2003, the company decided to reduce volatility and transition everyone to DC.
Before the transition, there was over HK$1 billion ($778 million) of total assets in the DC scheme. The transition saw this figure triple, so the company decided to bring in an additional provider. It held a beauty pageant that considered a number of providers and recently chose Schroders, Fischer says. The company continues to work with Fidelity, which is now developing an online service platform for PCCW's employees.
A detailed look at PCCW's pension situation and current needs is highlighted in the upcoming March edition of AsianInvestor magazine.
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