Reform Of Hong Kong MPF Operations: An Electronic Platform And Trustee Fees.
Legal News & Analysis - Asia Pacific - Hong Kong - Labour & Employment
25 August 2020
The Mandatory Provident Fund Schemes (Amendment) Ordinance 2020 (Amendment Ordinance) was gazetted on 24 July 2020 and came into effect on the same day. The Amendment Ordinance amends the Mandatory Provident Fund Schemes Ordinance (MPFSO) to: (i) empower the Mandatory Provident Fund Schemes Authority (MPFA) to establish a wholly owned subsidiary (eMPF Platform Company) to facilitate the establishment of the eMPF platform, and (ii) revise the level of annual registration fee (ARF) payable by the trustee of an MPF scheme from nil to 0.03% of the NAV of the MPF scheme, with effect from 1 October 2020. A trustee must not pass on the ARF to an MPF scheme.
eMPF Platform Company
The establishment of an eMPF Platform Company forms part of the MFPA’s initiative to establish the eMPF platform, a centralised electronic platform that will facilitate the standardization and automation of MPF scheme administration processes. It is expected that the eMPF platform will enhance the operational efficiency of MPF schemes, and achieve cost savings, thereby providing more room for reduction in the administration fee of MPF schemes. Furthermore, the eMPF platform is expected to facilitate other MPF reform initiatives such as full portability of member benefits among MPF schemes, and abolition of the arrangement of offsetting severance payments and long service payments against MPF accrued benefits.
The tender period for the eMPF platform project ended on 29 April 2020. The MPFA will conduct a comprehensive review of the MPFSO for the implementation of the eMPF platform.
The level of ARF is revised with the aim of helping the MPFA attain financial sustainability. The ARF will start to apply in respect of an MPF scheme if the immediate preceding financial period ends on or after 1 October 2020, at the rate of 0.03% of the NAV of the MPF scheme as at the end of that period. The ARF is payable by the trustee of an MPF scheme, and the trustee is prohibited from passing on the ARF to the MPF scheme and its members. The MPFA intend to review the ARF level from the seventh year of introduction with a view to achieving full cost recovery in the long run.
For more information, please contact:
Pauline Woo, Deacons