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The Government has proposed to introduce a mechanism to enable the automatic suspension and resumption of the levy for the Mandatory Provident Fund (MPF) Schemes Compensation Fund.
A spokesman for the Financial Services and the Treasury Bureau said today (May 9), "Under the proposal, the levy for the Compensation Fund will be automatically suspended when its reserve reaches above the maximum level of $1.4 billion and the levy will be resumed when the reserve drops below the floor level of $1 billion."
The spokesman added, "The proposal seeks to avoid continuation of levy collection of the Compensation Fund from scheme members unnecessarily as the levy is collected out of the assets of MPF schemes and ultimately borne by scheme members.
"This will benefit MPF scheme members by reducing scheme expenses and facilitating more of their MPF contributions going towards their retirement protection."
The proposal, which is set out in the Mandatory Provident Fund Schemes (General) (Amendment) Regulation 2012 (Amendment Regulation), will be presented to the Legislative Council (LegCo) for approval on May 30.
The proposed levels have taken into account the more likely risks which may occur in the MPF System and which may result in claims against the Compensation Fund.
Since the inception of the MPF System in 2000, the Mandatory Provident Fund Scheme Authority (MPFA) has been collecting an annual levy at the rate of 0.03 per cent of the net asset value of MPF assets from trustees for the Compensation Fund. With the Compensation Fund accumulated to over $1.6 billion and with no claim having ever been received, the MPFA has reviewed the optimal reserve level of the Compensation Fund and proposed a mechanism for automatic suspension and resumption of the levy.
As the balance of the Compensation Fund currently stands at around $1.6 billion, the levy can be suspended with effect from the third quarter of 2012 if LegCo approves the Amendment Regulation within the current legislative session.
The Compensation Fund was set up in 1999 to compensate scheme members for losses of their accrued benefits that are attributable to misfeasance or illegal conduct committed by the trustees approved by the MPFA or other persons concerned with the administration of those MPF schemes.
"The MPFA will keep under review the optimal maximum and floor reserve levels to ensure their continued effectiveness," the spokesman added.
Ends/Wednesday, May 9, 2012
Issued at HKT 16:59
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