FINANCIAL AND MONETARY AFFAIRS
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The existing self-regulatory system for insurance intermediaries has been in operation since 1995. In recent years, there have been rapid developments in the industry such as the growing numbers of insurance intermediaries and the increasing sophistication of insurance products. There is also a rising public expectation for better consumer protection. The IA considers that there is a need to review the existing system. It is considering the comments in response to the consultation document on the regulatory system for insurance intermediaries issued last year. It will consult the industry further in 2002.
The IA has launched an educational initiative since 2000 by publishing two educational booklets to enhance the public's understanding of the role of insurance intermediaries. I lens, a quarterly publication to enhance the public knowledge and awareness of insurance matters, has been issued and a 24-hour enquiry hotline has also been set up. In 2001, the IA published the pamphlet entitling Buying Insurance What you need to know.
Retirement Protection Schemes: Mandatory Provident Fund Schemes and Occupational Retirement Schemes
Main Features
On December 1, 2000, the Mandatory Provident Fund (MPF) System was fully implemented to encourage the workforce to save and invest for their retirement protection. The system, which was formulated after extensive consultation, is a privately managed, employment-related mandatory system of provident fund schemes. Unless exempted, employees aged between 18 and 65 and self-employed persons are required to participate in MPF schemes.
The MPF System provides for joint contributions by the employer and employee, each contributing 5 per cent of the employee's relevant income to a registered MPF trust scheme, subject to the maximum and minimum levels of income for contribution purposes. The accrued benefits are fully vested in the scheme members and can be transferred from scheme to scheme when employees change or cease employment. A self-employed person has to contribute 5 per cent of his or her relevant income. In normal circumstances, benefits must be preserved until the scheme member attains the retirement age of 65.
By the end of 2001, about 88 per cent of the employers, 95 per cent of the relevant employees and 91 per cent of the self-employed persons have participated in the MPF. The total MPF assets amounted to about $36 billion, with monthly MPF contributions amounting to some $2 billion.
Unlike the MPF System which is compulsory, occupational retirement schemes (ORSO schemes) registered under the Occupational Retirement Schemes Ordinance (ORSO) are voluntary schemes established by employers. The objective of the ORSO is to regulate such schemes through a registration system to ensure that they are properly administered and funded. All registered schemes must meet certain requirements, including asset separation, independent trusteeship, restricted investments, funding, independent audit, actuarial reviews, information disclosure and the submission of audited financial statements to the ORSO Registrar.
To tie in with the implementation of the MPF System, ORSO schemes that fulfilled certain conditions were granted MPF exemption. Members of such schemes may