PLC Paper No. CB(1)7/97-98
(These minutes have been seen by the
Administration and cleared with the
Ref : CB1/HS/1/96/1

Subcommittee on Mandatory Provident Fund System

Minutes of Meeting held on Friday, 23 May 1997, at 12:45 p.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 CHAN Wing-chan
    Hon CHAN Yuen-han
    Hon NGAN Kam-chuen
    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 LEE Cheuk-yan
    Hon Paul CHENG Ming-fun
    Hon LAW Chi-kwong
    Hon MOK Ying-fan

Public officers attending :

    Mrs Pamela TAN
    Mandatory Provident Fund Office
    Ms Maisie CHENG
    Assistant Director
    Scheme Operations
    Mr Raymond TAM
    Assistant Director
    Regulatory Standards
    Mr Duncan Berry
    Deputy Principal Crown Counsel
    Legal Department

Clerk in attendance :

    Miss Polly YEUNG
    Chief Assistant Secretary (1)3

Staff in attendance :

    Mr Jonathan DAW
    Consultant (Legal Service)
    Ms Connie SZETO
    Senior Assistant Secretary (1)5

I. Confirmation of minutes of meetings

(LegCo Papers No. CB(1)1587/96-97 and 1618/96-97)

The minutes of the meetings held on 20 January 1997 and 17 March 1997 were confirmed.

II. Report on outstanding issues - ORSO interface

(LegCo Paper No. CB(1)1647/96-97(01))

Comments and views of employer groups

2. Miss CHAN Yuen-han and Mr CHAN Wing-chan expressed strong dissatisfaction at the employer groups’ opposition to the seven proposals on ORSO interface arrangements raised by members at past meetings. They opined that the proposals, which aimed at enhancing protection for ORSO scheme members, were reasonable and practicable. Miss CHAN Yuen-han questioned the Administration’s lack of active efforts in reconciling the differences between members and employer groups. She opined that the information reported in the Administration paper was not representative of the general stance of employers as she was not aware of such strong opposition at informal meetings with some employer groups. She was concerned about possible misunderstanding on the proposals and suggested that the Subcommittee should meet major employer/trade organizations to discuss their concerns.

3. In this connection, the Chairman said that as far as he knew, members and employer groups held different views on the proposed ORSO interface arrangements and the Administration had made considerable effort to resolve the differences. As regards holding meetings with employer/trade organizations, given the limited time available in the current session and the fact that the Subcommittee had yet to commence scrutiny of the subsidiary legislation, it might be necessary for members to pursue the matter with employer groups and the Administration outside formal meetings.

4. Responding to members’ comments, the Director of MPF Office(D/MPFO) stressed that the Administration had adopted a pro-active role in following up issues related to ORSO interface arrangements. Considerable discussion and negotiations at formal and informal meetings had taken place in arriving at the proposals put forward to members in January 1997. Following members’ suggestions, the Administration had held a number of meetings with the Panel of Specialists and major employer groups and their comments and views on the proposals were fairly recorded in the information paper. Despite strong objection from employer groups, the Administration would continue the dialogue in the hope that a mutual compromise could be achieved.

Members’ proposals on ORSO interface arrangements

5. In explaining the major concerns of the Panel of Specialists and employer representatives, the Assistant Director, Regulatory Standards (AD/RS) said that they referred to the many compromises already made on their part and maintained their stance against imposing MPF requirements on ORSO schemes. Employers considered that the interests of ORSO scheme members were already safeguarded as they would be given an one-off option upon implementation of the MPF system to choose between ORSO or MPF coverage.

6. On some members’ proposal of requiring employers to relinquish their right under existing ORSO schemes to withhold employees’ benefits upon dismissal for cause, Mr CHAN Wing-chan held the view that in order to prevent employers from abusing their withholding right when long-serving employees were dismissed for minor misconduct, employers should only be allowed to withhold employees’ benefits upon dismissal for criminal acts. Mr NGAN Kam-chuen shared Mr CHAN’s view and further suggested that employers should be obliged to consider the employee’s past performance before deciding to withhold the latter’s retirement benefits. In response, AD/RS said that employer groups opined that the proposal might give rise to abuse and inequity as employees would then be given the same treatment irrespective of their performance and circumstances of dismissal. Since there were appeal channels for employees aggrieved by employers’ decision to dismiss them for cause, abuse by employers could be checked. AD/RS also clarified that the employer was only allowed to withhold the employer-funded portion of the employee’s retirement benefits upon dismissal for cause.

7. As regards the proposal of providing employees’ with an option between the existing ORSO scheme or MPF coverage upon any change in future benefits level, Mr NGAN Kam-chuen envisaged that as minimal administrative work would be involved, employers should have no difficulty in complying with the requirement.

III. Total picture on measures to protect the low-income group

(LegCo Paper No. CB(1)1647/96-97(02))

8. In response to Miss CHAN Yuen-han, AD/SO confirmed the Administration’s proposal of requiring all MPF schemes to provide a capital preservation product as one of the investment options for scheme members in order to protect their contributions from erosion by administrative fees or poor investment returns. As regards the setting up of industry schemes, AD/SO said that after considering members’ suggestion, the Administration would set up more than one industry scheme for the construction and catering industries.

IV. Scrutiny of the draft Mandatory Provident Fund Schemes (General) Regulation

(LegCo Paper No. CB(1)1438/96-97, 1503/96-97 and 1647/96-97(03))

9. In response to members, D/MPFO advised that the Administration would issue the remaining parts of the draft MPF Schemes (General) Regulation and the rest of the subsidiary legislation for members’ consideration as early as possible.

10. Members noted that should LegCo’s approval of the subsidiary legislation be sought at the last sitting on 23 June 1997, the Administration would have to give notice for moving the relevant resolution by 6 June 1997 and the deadline for Members to give notice of amendments would be 16 June 1997. In view of the complexity of the subject and the controversial issues involved, members reckoned that it was unlikely for the President to extend the deadline as sufficient time must be allowed for Members to consider the subsidiary legislation and proposed amendments, if any.

11. Taking into account time constraints, the voluminous texts, complexity of the issues and the need to consult a number of related organizations, members considered it not possible for the Subcommittee to complete scrutiny of the subsidiary legislation before 6 June 1997 and that it would be irresponsible to vote on the subsidiary legislation hastily without thorough scrutiny.

12. On the way forward, Mr SIN Chung-kai opined that the Subcommittee should not commence examination of the subsidiary legislation and that the Administration should consult the public extensively with a view to finalizing the subsidiary legislation for consideration by the first legislature of the Hong Kong Special Administrative Region in 1998-99. Miss CHAN Yuen-han and Mr CHAN Wing-chan, while supporting early implementation of a retirement protection system for the entire workforce, nevertheless recognized the complexity of the work involved. In this connection, D/MPFO reiterated the Administration’s intention to implement the MPF system as early as possible without further delay.

13. The Chairman concurred that the Subcommittee should not commence scrutiny of the subsidiary legislation but should continue to follow up on outstanding issues arising from past meetings. He suggested reporting the Subcommittee’s views on the way forward to the House Committee and seek the latter’s advice. Members agreed to the Chairman’s suggestion.

(Post-meeting note:

  1. The Chairman reported on progress of the work of the Subcommittee at the House Committee meeting on 23 May 1997. The House Committee agreed with the Subcommittee’s proposed course of action.

  2. With the concurrence of the Chairman, the meetings previously scheduled for 29 May and 2 June 1997 were cancelled. The next meeting would be held on 5 June 1997 to meet employer/trade organizations for discussion of ORSO interface arrangements.

14. The meeting ended at 2:30 pm.

Provisional Legislative Council Secretariat
7 July 1997

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