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Employers who fail to make Mandatory Provident Fund payments on time will be levied surcharges, which will be credited to the employees’ MPF accounts.

The Management Board of the Mandatory Provident Fund Schemes Authority (MPFA) decided today (19 July 2001) that on receiving default contribution reports from MPF trustees, the MPFA will levy surcharges as set out in the law.

The Authority will, before the end of this month, issue letters to each of the 200,000 participating employers, reminding them that they are required to make contributions on time. Extensive publicity will also be launched to put across the message.

The MPFA announced earlier this year that in view of MPF being a new system that involved more than two million participants, thus presenting some unavoidable teething technical and administrative problems, it would adopt a flexible approach when handling default reports from trustees during the adaptation period up to the end of June. Nevertheless, complaint cases involving employers who intentionally default on payments have been dealt with according to the law.

According to the MPF legislation, employers are required to make payments within 10 days after the contribution period. To those who fail to do so, the MPF trustee will issue a reminder requesting them to settle the payments, or rectify any discrepancies within a 30-day “settlement period”.

If the employer does not settle the outstanding amount during the settlement period, the trustee will have to report the default to the MPFA. On receiving the trustee’s report, the MPFA will issue a notice to the employer, demanding him to make the contributions as well as levying a surcharge of 15 per cent at an annual rate.

The surcharge will be increased to 20 per cent if the employer ignores the payment notice.

Chairman of the MPFA, the Hon Mr. Charles Lee Yeh-kwong, said: “The Authority found that in the initial months of MPF’s operation, most cases were careless or technical breaches. The System has been up and running and all parties should have by now got used to the operation. The MPFA needs to enforce the law to deter default payments and to protect the interests of scheme members.”

Up to the end of last month, a total of 1,246 complaints of default contribution were received. The MPFA has completed investigations into 660 of these cases and found that 95 per cent were false alarms or technical breaches.  Most of the employers involved had made up the default payments following advice from the Authority.

During today’s meeting, the Management Board was also briefed on the progress regarding the review of the operational aspects of the MPF System.

The MPFA has invited representatives from employer and employee groups, the MPF industry and the Government to join an MPF Schemes Operation Review Committee. The Committee, which will not touch on policy areas, will review the administrative and operational aspects of the legislation, with a view to enhancing the effectiveness and efficiency of the MPF System. The law firm Arculli and Associates has been engaged to assist in the review.

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19 July 2001