Provisional Legislative Council
PLC Paper No. CB(1)1148
(These minutes have been
seen by the Administration)
Ref : CB1/BC/3/97
Bills Committee on
Provident Fund Schemes
Legislation (Amendment) Bill 1997
Minutes of the meeting held on Monday, 19 January 1998, at 10:45 am in the Chamber of the Legislative Council Building
Members present :
Hon Ronald ARCULLI, JP (Chairman)
Dr Hon LAW Cheung-kwok (Deputy Chairman)
Hon WONG Siu-yee
Hon HO Sai-chu, JP..
Hon LEE Kai-ming
Hon Henry WU
Hon MA Fung-kwok
Hon CHAN Yuen-han
Hon CHAN Kam-lam
Hon YEUNG Yiu-chung
Hon Ambrose LAU Hon-chuen, JP
Hon CHOY So-yuk
Members absent :
Hon James TIEN Pei-chun, JP
Hon Mrs Peggy LAM, JP
Dr Hon Mrs TSO WONG Man-yin
Hon Paul CHENG Ming-fun, JP
Dr Hon TANG Siu-tong, JP
Hon NGAN Kam-chuen
Public officers attending :
- Mrs Pamela TAN
- Mandatory Provident Fund Office
- Mr Raymond TAM
- Assistant Director/Regulatory Standards
- Mandatory Provident Fund Office
- Ms Hendena YU
- Senior Managr/ORSO Interface
- Mandatory Provident Fund Office
- Mr Geoffrey FOX
- Senior Assistant Law Draftsman
- Department of Justice
Clerk in attendance:
- Miss Polly YEUNG
- Chief Assistant Secretary (1)3
Staff in attendance :
- Mr LEE Yu-sung
- Senior Assistant Legal Adviser
- Miss Anita HO
- Assistant Legal Adviser 2
- Mr Daniel HUI
- Senior Assistant Secretary (1)5
I.Meeting with the Administration
Members commenced scrutiny of the draft Mandatory Provident Fund Schemes (Exemption) Regulation and deliberated on the following proposed sections.
Draft Mandatory Provident Fund Schemes (Exemption) Regulation
Proposed section 2
2.Noting that retirement schemes established under the Occupational Retirement Schemes Ordinance (ORSO) after the cut-off date of 15 October 1995 would not be eligible for exemption under the MPF Schemes Ordinance, some members were concerned that this provision might result in the winding up of a considerable number of ORSO schemes established after the cut-off date upon implementation of the MPF Schemes Ordinance. Consequently, retirement benefits of members of the affected ORSO schemes offering more favourable terms would be reduced on transfer to MPF schemes. In response, the Assistant Director/Regulatory Standards (AD/RS) said that the issue had been discussed by the former LegCo Subcommittee on MPF System. It was agreed that a cut-off date was necessary to streamline administrative procedures and to avoid the establishment of a large number of ORSO schemes with substandard configurations before the implementation of the Ordinance solely for the purpose of seeking exemption under the MPF system. The Administration considered that the proposed approach had struck a reasonable balance between preserving the integrity of the MPF system and minimising interference with ORSO schemes already set up by employers voluntarily at the time of the enactment of the MPF Schemes Ordinance in 1995.
|3.At the request of members, the Administration would provide further information on the number of ORSO schemes set up after the cut-off date of 15 October 1995.
Proposed section 4
4.AD/RS explained that most local members of ORSO exempted schemes were employees of overseas companies or overseas governments working in Hong Kong. He added that under the proposed section, existing members and newly eligible employees of ORSO exempted schemes would be allowed to elect remaining in the ORSO exempted scheme or joining a MPF scheme.
Proposed section 27
5.In reply to members, the Senior Assistant Legal Adviser (SALA) confirmed that under proposed section 27(3), future amendments to Schedules to the Regulation would be subject to the approval and amendment of the legislature.
Proposed Schedule 1
Proposed Part 1
|6.At the Deputy Chairmans request, the Administration would amend item 7 of proposed Part 1 to the effect that the employer of an ORSO exempted scheme would be required to provide also the "fax number" of the person who could respond to enquiries relating to the ORSO exempted scheme and the MPF scheme to existing members and newly eligible employees of the ORSO exempted scheme. A similar amendment would also be made to proposed Part 2 - item 9.
Proposed Part 2
7.Some members were concerned that the employer of an ORSO registered scheme might not provide adequate information to its employees when the latter were required to elect whether to remain in the ORSO registered scheme or to join an MPF scheme. In response, the Administration confirmed that the MPFA would issue guidelines under item 5 of proposed Part 2 on illustrative examples demonstrating the difference in benefits between the relevant ORSO registered scheme and the MPF scheme.
Proposed Schedule 2
Proposed section 8
|8.Some members enquired whether there was any provision restricting an employer of a MPF-exempted ORSO-registered scheme from reducing members benefits under the scheme. In reply, AD/RS advised that as ORSO schemes were voluntary in nature, the employers obligations would only be bound by the terms of the relevant employment contract. The purpose of the proposed section was to provide employees with a right to switch to a MPF scheme should the employer of the ORSO registered scheme reduced future benefits under the scheme.
Proposed section 10
|9.In response to the Chairmans concerns, the Administration would amend the proposed section to enable the MPFA to extend, if necessary, the 6-month deadline for the trustee of a MPF-exempted ORSO-registered scheme to submit an annual report to the Authority.
Proposed Schedule 3
Proposed section 1
|10.AD/RS advised that in line with a Committee stage amendment to the Bill to be moved by the Administration , the expression "chief executive" would be amended to "chief executive officer" when referring to the chief executive of a company.
Proposed section 3
11.AD/RS advised that the proposed section sought to regulate the appointment of investment managers of a MPF-exempted ORSO-registered scheme after the implementation of the MPF system. The Administration anticipated that relying solely on locally registered investment managers might not be able to satisfy the large demand for investment managers after implementation of the MPF system. To address the issue, proposed section 3(1)(b) would enable the appointment of an overseas investment adviser to be the investment manager of the scheme provided that the overseas investment adviser was duly authorized by an authority recognized by the MPFA. In this regard, the MPFA would consult the Securities and Futures Commission in determining the recognized overseas authorities for the purpose of subsection (1)(b).
12.In reply to members, AD/RS confirmed that under proposed subsection (2), investment managers of MPF-exempted ORSO-registered schemes appointed before implementation of the MPF system would not be affected by the requirements in the proposed section.
Draft Mandatory Provident Fund Schemes (Amendment of Schedule 6) Notice 1998
|13.The Administration would replace the expression "the Governor in Council" with "the Chief Executive in Council" in the English version of the draft Notice to rectify a drafting error.
II.Any other business
14.The Chairman reminded members that the next meeting would be held on 20 January 1998 at 10:45 am.
15.The meeting ended at 12:45 pm.
Provisional Legislative Council Secretariat
16 March 1998