ENG-2011 — Page 131

Financial and Monetary Affairs 95

As a member of the International Association of Insurance Supervisors (IAIS), Hong Kong endeavours to ensure that its supervisory regime is in line with prevailing principles and standards. The Government has established an Insurance Advisory Committee to advise the Chief Executive on matters relating to the administration of the ICO and the carrying on of insurance business in Hong Kong.

Recent Developments

To strengthen investor protection, the IA, in collaboration with the Hong Kong Federation of Insurers, has adopted a multi-pronged approach to enhancing the regulation of sale of Investment Linked Assurance Scheme (ILAS) products, including requiring intermediaries to conduct improved suitability assessment, extending the cooling-off period from 14 days to 21 days, enhancing the syllabus of the Investment-Linked Long-Term Insurance Examination and requiring intermediaries to provide to potential policyholders with a pamphlet setting out key issues that they should consider before they procure ILAS products at the point of sale. Since May 2011, insurers were prohibited from offering gifts to promote the sale of ILAS products. Separately, with effect from June 2011, insurers were required to provide a copy of the Product Key Facts Statement for the relevant ILAS product to the customer together with the policy.

As a member of the IAIS, the IA continues to participate in the development of international standards in insurance supervision. In response to the financial crisis and its impact on the global insurance industry, the IAIS has revamped relevant international standards to strengthen insurance supervision, with particular emphasis on improving group and cross sectoral supervision. The IA is examining the new standards and their application in Hong Kong, taking local circumstances into

account.

In addition, the IA will continue to participate in supervisory colleges so as to work closely with regulators in other jurisdictions in regulating major insurance groups.

Mandatory Provident Fund Schemes and Occupational Retirement Schemes

Main Features

The MPF System was implemented on December 1, 2000 to assist 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 persons of 18 years of age or above, and below the age of 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 as mandatory contributions, subject to the maximum and minimum levels of relevant income (Max RI and Min RI respectively) for contribution purposes. The accrued benefits can be transferred when employees change employment or cease to be employed. A self-employed person has to contribute 5 per cent of his or her relevant income. Accrued benefits derived from mandatory contributions must be preserved until the scheme member