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The MPFA will be establishing guidelines on investments. These guidelines will lay down broad investment principles such as avoiding over-concentration of risk and restrictions on the use of derivatives for hedging purposes only. We need to strike the right balance so that we do not over-regulate and stifle the ability of the industry to maximise investment returns. But at the same time, we need to protect the interests of scheme members by ensuring that their retirement benefits are secured adequately.

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Residual Provident Fund Scheme

I now turn to the Residual Provident Fund Scheme. Members would recall that the consultants have advised that there would be sufficient individuals and companies in the market interested in becoming approved trustees, and that as such it would probably not be necessary to provide a Residual Provident Fund Scheme. The industry also agrees with the consultants. We have, nevertheless, included in the Bill a provision for these scheme to be established. However, some Members are concerned that Clause 22, as drafted, would not require the Authority to provide for such a scheme before the coming into operation of Section 6 of the Ordinance, and as such, may not provide sufficient comfort to individuals who are unable to find a scheme in the market.

To meet these legitimate concerns, even though we believe that the market will provide schemes for all who need them, we will be amending clause 22 of the Bill to require the Authority, prior to the commencement of any of the provisions of section 6, to take all necessary steps to cause to be established the Residual Provident Fund Scheme. The principal purpose of that Scheme would be to provide membership, as a scheme of last resort, to those persons who had been unable to find a scheme themselves, and where the Authority had also been unable to obtain access to a registered scheme for them. I shall move a CSA to this effect later on.

Approval of subsidiary legislation

I turn now to the important issue of approval of subsidiary legislation. We have always been committed to full consultation with Members of this Council and other interested parties in the community when drawing up the subsidiary legislation. In order to reflect this spirit of consultation, we are happy to agree that until such time as clause 6 of the Bill is brought into operation, all subsidiary legislation made under clauses 44 and 45 and notices made under clause 46, should be made by positive resolution of this Council in accordance with s. 35 of Cap. 1.