ENG-2000 — Page 119

FINANCIAL AND MONETARY AFFAIRS

transparency. The IA is also empowered to accept actuarial standards comparable to the prescribed one, for compliance by the appointed actuaries of insurers.

Mandatory Provident Fund Schemes Authority

The Mandatory Provident Fund Schemes Authority (MPFA), which was set up in September 1998 under the Mandatory Provident Fund Schemes Ordinance (MPFSO), is tasked with the responsibility of the prudential regulation and supervision of the Mandatory Provident Fund (MPF) System and ensuring compliance with the MPFSO. Two statutory committees, the Mandatory Provident Fund Schemes Advisory Committee and the MPF Industry Schemes Committee, have been established to advise the MPFA on the overall operation of the MPFSO and the Industry Schemes, respectively. A Mandatory Provident Fund Schemes Appeal Board has also been set up under the MPFSO to hear appeals against the decisions of the MPFA.

On December 1, 2000, the MPF System was fully implemented to assist members of the workforce to accumulate financial resources for their retirement protection. The MPF System, which was formulated after extensive consultation, is a privately managed, employment-related mandatory system of provident fund schemes. Except those exempt in the MPF legislation, employees aged between 18 and 65 and self-employed persons are required to participate as members of MPF schemes.

The MPF System provides 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 minimum levels of income for contribution purposes. The accrued benefits will be fully vested in the scheme members and can be transferred from scheme to scheme when employees change or cease employment. A self-employed person has to contribute 5 per cent of his or her relevant income. In normal circumstances, benefits must be preserved until the scheme member attains the retirement age of 65.

During the year, MPFA has proceeded zealously with the preparatory work essential for launching the MPF System in December. The main areas of preparatory work include the development and installation of an information management system, approval and close monitoring of MPF trustees, approval of products and registration of schemes, as well as exempting certain occupational retirement schemes from MPF requirements. The MPFA has also launched an intensive public education and publicity campaign since January to instil public awareness and understanding of the MPF System, and to remind the employers and self-employed persons of their legal responsibilities under the MPFSO. The campaign has been included in the Government's major publicity campaign for 2000-01.

As the MPF System is a new system for Hong Kong, apart from the efforts made by the Government and MPFA, the success of the system will depend on the support from the employers, employees and the self-employed. Strenuous efforts will be made in 2001 to ensure the compliance with the MPFSO by the relevant employers, employees and self-employed persons, to monitor and regulate the operation of the MPF System, to monitor MPF service providers and to ensure that the interests of MPF scheme members will be fully protected.

Apart from supervising and regulating the MPF System, the MPFA is also appointed the Registrar of Occupational Retirement Schemes to administer the

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