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The Government today (May 17) gave a notice to the Legislative Council (LegCo) to move a motion for the passage of the Mandatory Provident Fund Schemes (General) (Amendment) Regulation 2006.
Since the implementation of the Mandatory Provident Fund (MPF) System in December, 2000, the Government and the Mandatory Provident Fund Schemes Authority (MPFA) aim to strengthen and enhance the MPF System to ensure that it is in line with the prevailing market practice and protecting the best interests of MPF scheme members.
Over the past few years, the Government proposed a number of amendments to the MPF legislation by introducing two amendment bills into the LegCo, which were both passed.
On the other hand, the MPFA has established the MPF Schemes Operation Review Committee. The Review Committee comprises representatives of employee and employer groups, service providers, professional bodies etc. It is tasked to review the operation of the MPF System for further improvement of the relevant legislation.
A Government spokesman said the Review Committee had completed a review of the investment regulations contained in the Mandatory Provident Fund Schemes (General) Regulation.
"In response to MPFA's proposals, which are based on the results of the said review, the Government now intends to introduce a number of technical amendments to the General Regulation into LegCo after considering the operational experience of the MPF investment rules and the latest development of the financial markets.
"There are 11 proposals, which aim to enhance protection of MPF scheme members' interests, improve operation of the investment rules, enhance flexibility of and remove undue restrictions on MPF investment."
Citing some proposals as examples, the spokesman said that in the area of enhancing protection of MPF scheme members' interests, there were proposed amendments for ensuring that MPF funds would not be overexposed to investments in any single entity, and clarifying the types of investments that were to be treated as deposits so that investments of MPF funds in structured products would be regulated properly.
"As to enhancing flexibility of MPF investment, there are proposed amendments for introducing a mechanism to determine whether emerging investment products should be included as permissible investments, and removing doubts about the ability of MPF funds to acquire new shares through initial public offers.
"The Amendment Regulation aims to enhance the investment regulations regarding MPF funds. It will not change the existing policy. The Amendment Regulation will allow sufficient time for service providers to adjust the existing investment portfolios and relevant systems so as to cope with the various amendments.
"The MPFA will maintain dialogue with the service providers on the relevant work and various MPF Guidelines that have to be prescribed."
As at the end of April, 2006, the accumulated net asset value of MPF was more than HK$160 billion. More than two million employers, employees and self-employed persons are participating in MPF schemes.
If the House Committee of the LegCo decides it is not necessary to form a subcommittee to scrutinise the Amendment Regulation, the Government will move a motion for the passage of this Amendment Regulation on June 14.
The spokesman stressed that in the light of constant development of the financial markets, it was necessary to review the MPF investment regulations and enhance the relevant arrangement from time to time to ensure that they were in line with the current market situation and were able to protect the best interests of MPF scheme members.
"The Government and the MPFA trust that the MPF scheme members and the industry will welcome those proposals," the spokesman said.
Ends/Wednesday, May 17, 2006
Issued at HKT 12:01
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