XN000022-1988-06-10 — Page 6

FRIDAY, JUNE 10, 1988

5

TO

BEFORE FINAL DECISIONS ARE TAKEN, THE PUBLIC ARE WELCOME COMMENT ON THE PROPOSAL BY SENDING IN VIEWS TO THE MONETARY AFFAIRS BRANCH BY SEPTEMBER 15, 1988, HE SAID.

"INFORMATION ON RETIREMENT SCHEMES IN SKETCHY. APART FROM THE SCHOOL PROVIDENT FUNDS EDUCATION ORDINANCE, THERE IS VIRTUALLY VERY SUCH SCHEMES, MR NENDICK SAID.

H

HONG KONG IS RATHER ESTABLISHED UNDER THE LITTLE REGULATION OF

"UNDER THE INLAND REVENUE ORDINANCE, THE COMMISSIONER OF INLAND REVENUE MAY APPROVE RETIREMENT SCHEMES ACCORDING то INLAND REVENUE RULES FOR TAX EXEMPTION AND DEDUCTION PURPOSES.

AT THE END OF LAST YEAR, THERE WERE OVER 5,400 APPROVED SCHEMES IN HONG KONG. INDICATIONS ARE THAT THE NUMBER OF SCHEMES, BOTH APPROVED AND UNAPPROVED, IS INCREASING AT A STEADY PACE, HE SAID.

REFERRING TO THE REASONS FOR SUPERVISING RETIREMENT SCHEMES, MR NENDICK SAID: "IT IS GENERALLY ACCEPTED THAT RETIREMENT BENEFITS ARE PART OF AN EMPLOYEE'S REMUNERATION PACKAGE ALTHOUGH UNLIKE SALARIES OR WAGES, THEY INVOLVE DEFERRED PAYMENTS TO EMPLOYEES.

18 THE EMPLOYEE'S REASONABLE EXPECTATION то RECEIVE HIS ENTITLEMENTS UPON RETIREMENT."

"UNDER THE PRESENT SET UP, FEW EMPLOYEES ARE IN A POSITION ΤΟ ASSESS THE FINANCIAL SOUNDNESS OF THEIR SCHEMES. AN EFFECTIVE WAY то PROTECT EMPLOYEES IS THROUGH A SYSTEM OF STATUTORY DISCLOSURE AND OTHER REGULATORY REQUIREMENTS,

+ HE SAID.

HIGHLIGHTING THE FEATURES OF THE PROPOSED SYSTEM, MR NENDICK SAID: "THE MAIN FEATURE OF THE PROPOSED SYSTEM IS THE SEPARATION OF ASSETS OF RETIREMENT SCHEMES FROM THE BUSINESS ASSETS OF THE COMPANY. THIS ENSURES THAT ASSETS OF RETIREMENT SCHEMES WILL NOT BE AFFECTED EVEN IF THE COMPANY RUNS INTO FINANCIAL DIFFICULTIES.

UNDER THE PROPOSAL, ALL SCHEMES MUST BE REGISTERED WITH AN AUTHORITY TO BE SET UP AS PART OF THE MONETARY AFFAIRS BRANCH.

TO GAIN REGISTRATION, THE SCHEME MUST BE FRAMED AS A TRUST AND MUST COMPLY WITH CERTAIN PROVISIONS; FOR EXAMPLE CONDUCTING AUDIT AND ACTUARIAL REVIEWS. THE AUTHORITY WILL MAINLY RESPOND TO REPORTED IRREGULARITIES OR DEFICIENCIES, MR NENDICK POINTED OUT.

ALSO DISCLOSE

"EMPLOYERS PROVIDING RETIREMENT SCHEMES BHOULD DETAILS OF THE SCHEMES TO BENEFICIARIES, INCLUDING THE TYPES AND CONDITIONS OF THE SCHEME, THE BENEFITS PROVIDED BTC. WILL ALSO BE PROVIDED WITH AUDITED ACCOUNT AND AUDIT THE SCHEME TOGETHER WITH ANNUAL STATEMENTA SPECIFYING THEY ARE ENTITLED TO RECKIVE.

SCHEME MEMBERS CERTIFICATE OF THE BENEFITA

"BY DISCLOSING