XN000022-1995-05-25 — Page 2

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FS on mandatory provident fund

The main features of the mandatory, privately managed provident funds system (MPF) are reasonable and should meet the main concerns and needs of both employers and employees, the Financial Secretary, Sir Hamish Macleod, said this (Thursday) evening.

Speaking at the Annual Dinner of the Financial Executives' Institute, Sir Hamish said the aim was "to provide the people of Hong Kong with a retirement protection system that will allow those who are in the workforce today to know that at the end of their working lives they should be able to retire in dignity and financial security".

Sir Hamish said the Government's aim was to enact the MPF primary legislation before the end of the legislative session in July.

"Such speed is only possible because we are adopting the approach that the primary legislation which we are now drafting should be confined to the essential elements of the system, with the details being provided for in the subsidiary legislation," he said.

Sir Hamish said there would be a reasonable opportunity for fine-tuning the details in the two year period that would be required for preparation of the necessary regulations and rules, so the MPF System might be brought into operation in 1997.

"Early implementation of the primary legislation will also enable the insurance and fund management industries to develop the necessary schemes for employees under the MPF System, and will allow employers time to find suitable schemes for their employees," he said.

Sir Hamish said an MPF Authority had been proposed to oversee the MPF System on a day to day basis.

"The functions of the Authority would include the administration and regulation of the MPF System, the authorisation and regulation of trustees, and the making of rules and guidelines to facilitate the smooth and safe running of the MPF System and its component schemes."

Sir Hamish said the consultants engaged to consider the detailed aspects of setting up and operating an MPF system estimated that the MPF Authority would require setting-up costs of $350 million and an annually recurrent cost of $270 million for its ongoing activities.