ENG-1999 — Page 111

FINANCIAL AND MONETARY AFFAIRS

The IA is committed to improving the transparency of the insurance industry. Starting from 1999, the IA has been releasing the provisional industry aggregate statistics to the public on a quarterly basis through the home page of the Office of the Commissioner of Insurance. Additionally, individual insurers' annual statistics are released through the IA's annual reports.

The Occupational Retirement Schemes Ordinance (ORSO) regulates private voluntary occupational retirement schemes operating in or from Hong Kong. The Commissioner of Insurance is appointed the Registrar of Occupational Retirement Schemes to administer the ORSO.

The ORSO does not compel employers to establish occupational retirement schemes for their employees. Its objective is to regulate all voluntarily established occupational retirement schemes through a registration system which requires that these schemes are properly administered and funded, so as to provide greater certainty that retirement scheme benefits promised to employees will be paid when they fall due.

All registered schemes must meet certain basic requirements, including asset separation (the assets of a scheme must be kept separate and distinct from the assets. of the employer or the scheme administrator); independent trusteeship (there should be at least one independent trustee who must not be the employer, his employee or his associate); restricted investments (any loan to the employer of the scheme or his associate out of the scheme's assets is prohibited, as is any excessive investment in the business undertaking of the employer); funding (the assets of a scheme must be sufficient to meet its aggregate vested and past service liabilities and the scheme shall be funded in accordance with the terms of the scheme and the actuary's funding recommendations (for defined benefit schemes)); independent audit; actuarial reviews (for defined benefit schemes); and the annual submission of audited financial statements to the Registrar. There are also requirements for disclosure of information to the scheme members regarding the operation of the scheme.

As for exempted schemes, annual submission of compliance certificates or membership statements, as appropriate, are required. Changes of certain scheme particulars in respect of both registered and exempted schemes are also required to be notified on prescribed forms and within statutory time limits.

At December 31, there were 17 347 registered schemes and 1 938 exempted schemes. These registered schemes covered an aggregate of 923 523 employees.

The statutory functions of regulating these voluntary occupational retirement schemes will be transferred to the Mandatory Provident Fund Schemes Authority from January 10, 2000.

Mandatory Provident Fund Schemes

The Mandatory Provident Fund Schemes Ordinance (MPFSO), enacted in August 1995 after extensive consultation, provides the framework for a privately managed mandatory system of provident fund schemes that will cover members of the workforce aged 18 or above. The MPFSO was amended in April 1998 setting out the standards and detailed requirements governing the operation of the Mandatory Provident Fund (MPF) system. The MPF System will provide for joint contributions by the employer and employee, each contributing 5 per cent of the employee's relevant income to a registered MPF trust scheme, subject to the maximum and

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