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the bulletin


Final Stages of MPF Countdown

Undecided members should consider
??Chamber-CMG Choice?? as their MPF provider

By the time they read this message, Chamber members should have informed their employees of their Mandatory Provident Fund (MPF) options. If they have not done so I urge them to move quickly in preparation for the start-up date for contributions of December 1 this year ?V just a few weeks away.

Under the requirements of the MPF legislation, all companies with employees in the Hong Kong SAR need to be MPF compliant by the start-up date. They also need to give employees plenty of time before the start-up date to consider their retirement fund and investment alternatives.

For those members already with an Occupational Retirement Scheme Ordinance (ORSO) scheme that has obtained exempt status, the tasks of implementing MPF and informing employees of their options is, at once simpler and more complex than for those firms without ORSO schemes.

Because they have had an ORSO scheme in place previously, they have a corporate culture that is used to retirement fund contributions and, probably, investment choices. They still have to offer an MPF alternative, but because knowledge already exists, explanations to employees should be easier.

On the other hand, the fact that they will now be offering two quite different types of retirement schemes side-by-side makes the education process on the choice between the two somewhat more complex and demanding of the responsible management.

For those firms without any existing ORSO scheme, there is clearly a need for a basic approach, with the task of explaining to employees the background and details of the MPF, before they can confidently consider the options available to them under the MPF itself.

Basically, the MPF is a compulsory and contributory retirement scheme involving employers and employees contributing 5 per cent each of the employees?? cash income towards an investment fund that will ultimately provide them with a considerable amount of money on their retirement.

A little over a month ago, the Mandatory Provident Fund Schemes Authority (MPFA) sent a letter to some 310,000 employers, reminding them to enrol their employees in MPF schemes as soon as possible so as to avoid the last minute rush.

The MPFA was concerned that at the end of July only 51,000 employers had chosen their MPF service provider. "Employers are encouraged to sign up before October, so that they will have more time preparing their payroll and accounting systems to support their MPF schemes," the MPFA said.

Employees also need time to make decisions between the various funds available to them in their particular MPF scheme. These options for investment range from low risk, guaranteed funds to higher risk, strongly equity orientated funds.

Although initially supportive of the further encouragement of voluntary retirement schemes, the Chamber threw its support behind the MPF back in 1996 after the government withdrew its plans for a contributory old age pension scheme, which the Chamber did not favour.

Since then, the Chamber has worked hard to keep its members abreast of developments concerning the MPF, including the timetable for implementation, which is now rapidly coming to a close.

Fortunately, the Chamber is in a position to help members with establishing their MPF scheme if they have not already done so. It has teamed up with CMG Asia in Chamber CMG Choice, a separate Master Trust with a special emphasis on the needs of small and medium enterprises.

So if you need help or advice in starting or implementing your MPF scheme then please call Chamber Services Ltd on 2823-1269 and speak with one of the Chamber??s own specialist MPF representatives, or one of the MPF experts seconded from CMG Asia. More general inquiries about the MPF System can be made on the MPFA??s hotline (2918 0102) or on its Web site at www.mpfahk.org.

I cannot emphasise how important it is to each and every company to be MPF compliant by the due date of December 1 this year -- for their own peace of mind, the benefit of their employees and the long term success of Hong Kong??s own retirement system for all employees.

If employers have not done so already, they should seek out a MPF service provider to ensure compliance by the due date. So please give Chamber Services Ltd a call or make other arrangements as soon as possible.