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No need to defer MPF implementation
There is no need to delay the implementation date of the Mandatory Provident Fund (MPF) System scheduled for December 1.
Noting that the MPF Ordinance already provided for some flexibility in terms of contribution arrangements, the MPFA's Executive Director (Member Protection), Mr Ernest Lee, reiterated that there is no need for any change to the December 1 commencement date.
"The MPF is a result of many years of deliberations at all levels of the community. The MPF principal legislation was approved as early as 1995. It has taken us another five years to promulgate the subsidiary legislation and prepare for the implementation of the MPF System.
"MPF is a very important social project with a far reaching impact on the entire working population. Short-term economic conditions should not halt the launch date since MPF contributions require a long time span to reach maturity and accrue sufficient retirement benefits for employees," said Mr Lee.
Mr Lee added that Hong Kong's economic situation had been improving steadily and that the MPF contributions would only increase the overall business costs by less than one per cent.
Under the MPF System, employers are able to enjoy tax benefits as their mandatory contributions for the benefits of their employees are tax deductible to the extent that they do not exceed 15 per cent of the employees' yearly emolument.
He believed that more than 100,000 small and medium-sized enterprises (SMEs) had been registered with MPF schemes, representing more than half of the total number of SMEs.
On investment protection, Mr Lee said the MPF System had the following stringent measures designed to protect the interest of scheme members:
* Fund managers are subject to very stringent investment restrictions. For example, the law prohibits concentration of investment in a single company in order to avoid investment risks associated with a particular company. The law also imposes stringent restrictions on the gearing of MPF assets, investment in derivatives and borrowing of securities. All the restrictions are meant to ensure that scheme members do not have to bear unnecessary investment risks;
* The MPF legislation requires each registered scheme to be audited by an independent auditor and the submission of financial statements to the MPFA annually;
* The law specifies that each MPF investment fund must maintain a statement of investment policy. Investment managers can only invest within the limits set out in the statement.
End/Tuesday, November 28, 2000
