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Part II
Clause 5 of the bill provides for the establishment of the MPF Schemes Authority. The functions of the Authority include ensuring compliance with the provisions of the legislation, the approval, regulation and prudential supervision of trustees, and the registration of provident fund schemes,
Part III
The heart of the Bill is in clauses 6(1), 6(2) and 6(3). Under clause 6(1), the employer must arrange for a registered provident fund scheme to receive contributions in respect of his relevant employees. Clause 6(2) requires the employer to contribute to the registered scheme the employer's contribution of 5% of relevant income of each relevant employee, to deduct from the relevant income of each relevant employee the employee's contribution of 5% of that income, and to remit the whole contribution to the trustee of the registered scheme no later than seven working days following payday. Clause 6(3) imposes a relevant requirement on self-employed persons to contribute 5% of their income.
Clause 8 of the Bill allows employees or self-employed persons whose relevant income is less than the minimum level specified in Schedule 3 to elect whether or not they wish to contribute to a provident fund scheme. On the advice of the Labour Advisory Board, employers of such persons will still have to contribute, irrespective of the employee's election. The provision will benefit the 240.000 members of our workforce whose income is below the current prescribed level of $4,000 a month.
Clause 10 of the Bill provides that contributions made in excess of the percentage level specified in Schedule 4, or after retirement age when an employee remains in employment or a self employed person in business, shall be voluntary.
An important feature of a mandatory system of provident fund schemes is the preservation of benefits until retirement age, i.e. under normal circumstances benefits are not paid out upon each change of job, but are preserved until retirement. Benefits may be transferred from one scheme to another upon change of job. Under clause 12, scheme trustees are prohibited from paying out accrued retirement benefits to any scheme member other than in accordance with clause 14. Clause 14 allows preserved benefits to be withdrawn as of right, in a lump sum, once a scheme member reaches the age of 65. It also provides for the early withdrawal of benefits by a scheme member who has reached the age of 60 and who has left the workforce permanently, as well as for early withdrawal under such circumstances as total disability or incapacity, or permanent departure from Hong Kong. Clause 13 deals with the transferability of benefits from scheme to scheme.