XN000022-1995-05-09 — Page 4

3.

"The compensation fund would be funded by levies assessed on the MPF Schemes, according to the size of their fund balances. In principle we accept the consultants' recommendation that there should be a Government grant or loan to help

start up

the fund. Government will therefore be seeking the approval of the Finance Committee for the amount of $300 million to be used for this purpose," he said.

Mr Leung pointed out that the Government agreed with the consultants that trustees should be central party in the MPF system and provision for trusteeship would therefore feature in the primary legislation.

"Trustees will in fact be scheme administrators who will be responsible for all aspects of the scheme. They will be subject to the scope of duty imposed upon trustees by law, comparable to those with fiduciary duties," he added.

He reiterated that it remained the Government's aim to introduce the MPF System Bill into the Legislative Council in June and to have the Bill enacted before the end of the current session in July.

"The complex issues relating to the regulation of the MPF System will be dealt with in the subsequent subsidiary regulations to be made," Mr Leung added.

Mr Leung said the Government had considered a number of options, including those in the consultants' report on how to deal with the estimated 20,000 existing occupational retirement schemes which were currently subject to registration under the Occupational Retirement Schemes Ordinance.

"There are no perfect solutions, mainly because of the diverse nature of these schemes. Our objectives are very clear. On the one hand, we want to preserve existing entitlements of employees under these schemes and not to upset the contractual relationship between employers and employees.

"On the other hand, we do not want to create a permanent loophole through which the mandatory requirements of the MPF, particularly preservation can be continuously evaded.

"We have therefore come up with a very simple solution, that is to exempt the existing registered ORSO schemes from the requirements of the MPF System on two conditions," Mr Leung said.