PLC Paper No. CB(1)56
(These minutes have been seen by the
Administration and cleared with the Chairman )
Ref : CB1/HS/1/96/1

Subcommittee on Mandatory Provident Fund System

Minutes of Meeting
held on Thursday, 19 June 1997,
at 10:00 a.m. in Conference Room A
of the Legislative Council Building

Members present :

    Hon Ronald ARCULLI, OBE, JP (Chairman)
    Dr Hon LAW Cheung-kwok (Deputy Chairman)
    Hon LEE Cheuk-yan
    Hon CHAN Wing-chan
    Hon CHAN Yuen-han
    Hon SIN Chung-kai

Members absent :

    Dr Hon HUANG Chen-ya, MBE
    Hon Christine LOH Kung-wai
    Hon James TIEN Pei-chun, OBE, JP
    Hon Paul CHENG Ming-fun, JP
    Hon LAW Chi-kwong
    Hon MOK Ying-fan
    Hon NGAN Kam-chuen

Public officers attending :

Mrs Pamela TAN
Mandatory Provident Fund Office
Mr Raymond TAM
Assistant Director
Regulatory Standards
Ms Hendena YU
Senior Manager
ORSO Interface

Attendance by Invitation :

American Chamber of Commerce, Hong Kong

Mr Michael BUTTON
Mr Stephen BUTLER

Employers’ Federation of Hong Kong

Mrs Minnie LI
Mr Patrick MAULE

Hong Kong Retirement Scheme Association

Mr Stuart LECKIE
Deputy Chairman

Federation of Hong Kong Industries


Clerk in attendance :

Miss Polly YEUNG
Chief Assistant Secretary (1)3

Staff in attendance :

Ms Connie SZETO
Senior Assistant Secretary (1)5

I. Confirmation of minutes of meeting

(LegCo Paper No. CB(1)1831/96-97)

The minutes of meeting held on 1 May 1997 were confirmed.

II. Meeting with deputations and the Administration on interface arrangements for schemes under the Occupational Retirement Schemes Ordinance (ORSO) with the MPF system

(LegCo Paper No. CB(1)1882/96-97)

2. The Chairman welcomed representatives of the four deputations to the meeting and apologized for the inconvenience caused as a result of the cancellation of the meeting scheduled for 12 June 1997 due to unforseeable circumstances. He explained that the purpose of the present meeting was to follow up on the proposals raised by Miss CHAN Yuen-han and Mr LEE Cheuk-yan at the last meeting on issues related to employers’ right to withhold employees’ benefits under an ORSO scheme upon dismissal for cause, as well as the freedom of choice for employees to opt for MPF or ORSO coverage.

Employers’ right to withhold employees’ benefits under an ORSO scheme upon dismissal for cause

3. Upon the Chairman’s invitation, Mrs Minnie LI of the Employers’ Federation of Hong Kong (EFHK) said that employer associations including the EFHK, the Hong Kong General Chamber of Commerce, the American Chamber of Commerce and the Federation of Hong Kong Industries (FHKI) had consulted their members on the issue. While members reckoned the importance of the MPF system in providing retirement benefits to the workforce and supported its early implementation, they maintained the view that the interface arrangements should cause minimal interference to existing ORSO schemes. The four employer associations had agreed in principle to accept Mr LEE Cheuk-yan’s suggestion of taking the implementation date of the MPF system as the cut-off date whereby pre-existing arrangements for withholding employees’ benefits under an ORSO scheme would be grandfathered with respect to benefits accrued up to the cut-off date. Thereafter, upon dismissal for cause, the portion of an employee’s benefits accrued under the scheme after the cut-off date and up to the amount of his statutory MPF benefits should not be subject to withholding. The Director of MPF Office confirmed that the Administration considered the proposal feasible and would work out further details arising from this revised arrangement.

4. Miss CHAN Yuen-han welcomed the employers’ acceptance of Mr LEE’s suggestion, but was still concerned about the predicament of long-serving employees who might have to forfeit their entitlement to employers’ contributions under an ORSO scheme on being dismissed for minor misconduct. She urged the employer associations to take a step forward and further consider her suggestion of restricting employers’ withholding right to cases in which employees were dismissed for criminal acts.

5. Commenting on Miss CHAN’s suggestion, Mrs LI of EFHK expressed employers’ concerns about practical difficulties in its implementation, notably the definition of "criminal acts" and the need to distinguish between such acts committed in the context of employment or otherwise. Mr K S YEUNG of FHKI added that the suggestion might lead to unnecessary litigation.

6. Addressing Miss CHAN’s concern about the predicament of long-serving employees, Mrs LI of EFHK assured members that possible abuse of the withholding right by employers could be checked as the circumstances justifying summary dismissal for cause had been stipulated in the Employment Ordinance and employers’ withholding right was governed by the relevant scheme rules. Mr YEUNG of FHKI stressed that employers had set up ORSO schemes voluntarily with a view to retaining long-serving staff with good performance. It had never been their intention to make use of the withholding provision to sanction employees. Mr Patrick MAULE of EFHK remarked that it was inappropriate to introduce further complications to the interface arrangements as this might induce employers to wind up their existing ORSO schemes.

7. Miss CHAN Yuen-han and Mr LEE Cheuk-yan reiterated that there were cases in which long-serving employees were deprived of their entitled benefits upon being dismissed for minor misconduct. In this connection, the Subcommittee urged the employer associations not to overlook possible abuse of the withholding right. In this connection, Miss CHAN Yuen-han said that she would continue to pursue her proposal.

8. Stressing that the Hong Kong Retirement Scheme Association (HKRSA) was not an employer organisation but represented the retirement schemes industry in Hong Kong, Mr Stuart LECKIE said that the Association considered both Miss CHAN’s and Mr LEE’s proposals unacceptable. He reiterated the association’s stance that the proposed MPF system should be the default option for the two-million workforce who were currently not covered by any retirement schemes and that no change should be introduced to existing ORSO schemes.

Mechanism ensuring genuine freedom of choice for employees

9. Mrs Minnie LI of EFHK said that the four employer associations were of the view that the future MPF Schemes Authority should play a pro-active role in assisting employees to exercise their option for ORSO or MPF coverage. The assistance offered should include hotline services for enquiries and complaints, issuing codes of practice and guidelines to employers and launching publicity and educational programmes.

10. Mr LECKIE of HKRSA concurred that employers should provide employees with detailed information on the existing ORSO scheme and the proposed MPF system, including their respective benefits entitlements under the two schemes, so as to facilitate employees in making a free and informed choice.

11. In response to the Chairman’s enquiry, the Assistant Director, Regulatory Standards advised that due to the difficulty and costs incurred in the calculation and transfer of employees’ accrued benefits, it was proposed that the employees’ option to choose between ORSO or MPF coverage upon implementation of the MPF system should be one-off.


12. In summing up, the Chairman said that the two meetings with the deputations were useful in resolving some of the differences between members and employer groups on ORSO interface arrangements. He thanked representatives for their views and asked the Administration to take follow-up action accordingly.

13. The meeting ended at 11:00 am.

Provisional Legislative Council Secretariat
17 July 1997

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