XN000022-1995-03-08 — Page 27

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Scheme administrators, i.e. trustees and authorised insurers, are required to keep proper accounting records of the scheme assets, and to submit audited annual accounts and returns in respect of the scheme to the Registrar of the Occupational Retirement Schemes. Under the present Ordinance, the Registrar is obliged to report on non-compliance with contributions and investment restrictions and may take interventionary action under the present system now. It can do so. Furthermore, Members of a scheme are entitled to have access to information about the assets of their scheme.

Authorised insurers and registered trust companies which manage retirement schemes are subject to supervision by the authorities. Insurers are required to observe the investment rules and regulations promulgated by the Insurance Authority. The trust companies must be registered with the Registrar of Companies under the Trustees Ordinance and meet.the registration requirements of that Ordinance. Proposals are in place to strengthen regulations of investments of trust assets.

These measures are part of the Government's role in ensuring prudential supervision and regulation of existing voluntary schemes. As I have said, we recognise fully that in a situation where contributions are mandatory, we must strengthen the regulation of fund managers and our system of prudential supervision. And this we shall do. It will be an important part of our consultant's brief. Furthermore, within the MPF, and with the collaboration of the insurance and fund management industries, we will develop a system to compensate for losses brought about by unlawful activity. But I want to stress, once again, what we will not do is to provide a guarantee against investment risk. To do so would be counter-productive, as it would encourage the sort of aggressive and unscrupulous fund management we must avoid.

I would like to, perhaps, address some Members' concern about Government's role in this, and Government's contributions. I am very pleased Members did remind us of our responsibility in this respect, and I am pleased to say that Government is prepared to consider the provision of a one-off capital contribution towards any fund or scheme that is set up to deal with benefit losses due to fraud or theft.

Secondly, on the question of preservation and portability. The purpose of any retirement protection system must be to ensure that an employee has accrued enough benefits by the time he leaves the workforce to allow him to enjoy a financially secure old age. For this to happen, we cannot let the employee simply take the benefits away with him each time he changes a job. Certainly we will need to ensure that preserved accrued benefits are transferred from one employer's scheme to the next upon change of job. The best way of doing this is one area where we will have need further advice from the consultants. However, this must not detract us from the need to include these necessary concepts as an integral part of the MPF.