ENG-2007 — Page 122

82 | Financial and Monetary Affairs

Mandatory Provident Fund Schemes and Occupational Retirement Schemes

Main Features

On December 1, 2000, the MPF System was implemented to help encourage the workforce to save and invest for their retirement. It is a privately managed, employment-related mandatory system of provident fund schemes. Unless exempted, employees and self-employed people aged between 18 and 65 are required to join MPF schemes.

The employer and employee are each required to contribute 5 per cent of the employee's relevant income to a registered MPF scheme, subject to the maximum and minimum levels of income for contribution purposes. The accrued benefits are fully vested in the scheme members and can be transferred from scheme to scheme when employees change employment or cease to be employed. A self-employed person has to contribute five 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.

By year-end, 99.5 per cent of employers (about 238 700), 97.6 per cent of relevant employees (2 130 300) and 75.1 per cent of self-employed persons (271 100) had enrolled in MPF schemes. Total MPF assets amounted to about $264.79 billion, with monthly MPF contributions amounting to around $2.6 billion.

Unlike the compulsory MPF schemes, occupational retirement schemes registered under the Occupational Retirement Schemes Ordinance are voluntary schemes established by employers. To tie in with the implementation of the MPF system, schemes registered under the ordinance that fulfilled certain conditions were exempted from MPF requirements. Members of such schemes may choose to remain in the existing scheme or join an MPF scheme. At year-end, there were 4 804 MPF- exempted occupational retirement schemes covering over 430 000 employees.

Mandatory Provident Fund Schemes Authority

Established in September 1998 under the Mandatory Provident Fund Schemes Ordinance, the Mandatory Provident Fund Schemes Authority (MPFA) is responsible for regulating and supervising the MPF System and ensuring compliance with the ordinance. It is also the Registrar of Occupational Retirement Schemes. To ensure that the interests of MPF scheme members are protected, the MPFA closely monitors the operation of MPF trustees and other service providers, investigates cases of non- compliance identified through reports, complaints or inspections, and takes enforcement actions accordingly. The MPFA also conducts MPF investment education to strengthen public awareness of the need to take care of their MPF investment and disseminates in-depth messages that will facilitate scheme members in choosing the appropriate funds.

Recent Developments

The MPFA has been pressing ahead with enhancing the transparency of MPF schemes, including information on fees and charges of MPF funds, to facilitate market competition and to enable scheme members to make more informed and