86 | Financial and Monetary Affairs
encourage members of the public to take out travel insurance. The IA also published an educational pamphlet 'Travel Insurance What You Need to Know' to provide useful tips to travel insurance policyholders.
In the light of international regulatory trends and developments in the insurance industry, the Government is reviewing the institutional set-up of the IA. The review entails a study on turning the IA into a regulatory agency independent of the Government.
The IA has commissioned a consultancy study on the need and feasibility of establishing Policyholders' Protection Funds (PPFs) in Hong Kong. Stage 1 of the study comprises a review of the existing regulatory regime and a feasibility study on establishing PPFs. The appointed consultant is working on the final report for Stage 1 for consideration by the Government, which keeps an open mind on the matter.
The IA commissioned another consultancy study in September 2003 to examine the need for enhancing the supervisory framework of the assets of long-term business insurers. The study focuses on the appropriate framework for asset valuation and the need for a mechanism that better safeguards the interest of Hong Kong policyholders in the event of failures of long-term insurers. The first stage of the study includes a review of the existing regulatory framework as well as international practice. Stakeholders will be consulted in the process.
The IA and the China Insurance Regulatory Commission entered into a cooperative agreement on insurance supervision in 2004 to promote mutual assistance and the exchange of information. The IA also regularly attends joint meetings of the insurance regulators of Guangzhou, Hong Kong, Macao and Shenzhen to discuss issues of common interest.
Mandatory Provident Fund Schemes and Occupational Retirement Schemes
Main Features
On December 1, 2000, the MPF System was implemented to help encourage the workforce to save and invest for their retirement. It is a privately managed, employment-related mandatory system of provident fund schemes. Unless exempted, employees and self-employed people aged between 18 and 65 are required to join MPF schemes.
The employer and employee are each required to contribute 5 per cent of the employee's relevant income to a registered MPF 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 employment or cease to be employed. A self-employed person has to contribute five 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 year-end, 98.2 per cent of employers (about 226 500), 97.4 per cent of relevant employees (1 974 400) and 77.6 per cent of self-employed persons