For discussion EC(95-96)66
on 13 December 1995

ITEM FOR ESTABLISHMENT SUBCOMMITTEE
OF FINANCE COMMITTEE

HEAD 148 - GOVERNMENT SECRETARIAT : FINANCIAL SERVICES BRANCH
Subhead 001 Salaries

Members are invited to recommend to the Finance Committee the following changes in establishment of the Financial Services Branch (FSB) -

1. creation of the following supernumerary directorate posts for the period from 1 March 1996 to 28 February 1997-

   1 Administrative Officer Staff Grade “B1”
   (D4) ($126,100 - $129,950)

   1 Administrative Officer Staff Grade “C”
   (D2) ($95,550 - $101,450)

   1 Assistant Commissioner of Insurance
   (D2) ($95,550 - $101,450)

   1 Principal Executive Officer
   (D1) ($80,450 - $85,400); and

2. an increase in the ceiling placed on the total notional annual mid-point salary value of all non-directorate posts in the permanent establishment of FSB in 1995 - 96 from $58,027,000 by $7,583,700 to $65,610,700 to permit the creation of 20 non-directorate posts.

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PROBLEM
PROPOSAL
JUSTIFICATION

The Directorate posts

• The proposed post ofDirector, MPFO
• The proposed post ofAssistant Director (MPF Schemes)
• The proposed post of AAssistant Director (Trustees and Interface)
• The proposed post ofPrincipal Executive Officer (Administration and Planning)
Review
Non-directorate posts

FINANCIAL IMPLICATIONS
BACKGROUND INFORMATION
CIVIL SERVICE BRANCH COMMENTS
RECOMMENDATION OF THE STANDING COMMITTEE ON DIRECTORATE SALARIES, AND CONDITIONS OF SERVICE
Job Description for irector, Mandatory Provident Fund Office (MPFO)
Job Description forAssistant Director (MPF Schemes)
Job Description for Asistant Director (Trustees and Interface)
Job Description for rincipal Executive Officer (Administration and Planning)
List of non-directorate posts

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PROBLEM

We need to provide staff to proceed immediately with the preparation of subsidiary legislation of the Mandatory Provident Fund Schemes Ordinance (MPF Ordinance) and other urgent tasks relating to the development of the Mandatory Provident Fund (MPF) System.

PROPOSAL

2. The Secretary for Financial Services (SFS) proposes to set up a Mandatory Provident Fund Office (MPFO) comprising four directorate staff and 20 non-directorate staff in FSB. The four directorate posts are -

1. 1 supernumerary post of Administrative Officer Staff Grade ‘B1’;
2. 1 supernumerary post of Administrative Officer Staff Grade ‘C’;
3. 1 supernumerary post of Assistant Commissioner of Insurance; and
4. 1 supernumerary post of Principal Executive Officer.

JUSTIFICATION

3. The MPF Ordinance was passed in July 1995. It provides for, among other things, the establishment of non-governmental mandatory provident fund schemes for the purpose of funding benefits on retirement, the registration of such schemes, the setting up of a regulatory regime and the establishment of the Mandatory Provident Fund Schemes Authority (MPFA) to oversee the administration and management of registered schemes.

4. These tasks require substantial input both at the policy and technical levels. Having regard to the complexity of the issues involved and the workload implications, SFS considers that it is not possible for the existing staff of FSB to absorb the tasks. He therefore recommends setting up an MPFO in order to take the implementation of the MPF Ordinance forward. The proposed structure of the MPFO is at Enclosure 1. The existing and proposed structure of FSB are at Enclosures 2 and 3 respectively.

The Directorate posts

The proposed post ofDirector, MPFO

5. The proposed MPFO will be headed by an Administrative Officer Staff Grade “B1” (AOSG ”B1”) (D4). He will be underpinned by three directorate officers comprising one Administrative Officer Staff Grade “C” (AOSG ”C”) (D2), one Assistant Commissioner of Insurance (ACI) (D2) and one Principal Executive Officer (PEO) (D1). The proposed AOSG “B1”, entitled as Director, MPFO, will be responsible to SFS for -

1. smooth running of the MPFO which is manned by a mixed team of civil servants and consultant’s staff;
2. overseeing the work of the consultants through the two Assistant Directors;
3. early completion of the preparation of the draft subsidiary legislation in an effective and efficient manner;
4. wide and thorough consultation on key issues at the appropriate level;
5. concerted effort between various branches and departments in completing the tasks of the MPFO;
6. private sector’s active participation in the process of collating ideas to be included in the subsidiary legislation; and
7. development of preliminary ideas on the set up, organisation, and operation of the future MPFA.

6. To perform the duties of the Director, MPFO, the incumbent needs to have sufficient seniority and extensive administrative experience to deal with the interaction of the financial services sector at senior levels and co-ordinate not only the efforts of various branches and departments but also input from the private sector. SFS therefore proposes that the post be pitched at D4 level in the Administrative grade. The job description of the Director, MPFO post is at Enclosure 4.

The proposed post ofAssistant Director (MPF Schemes)

7. The Assistant Director (MPF Schemes) (AD/ Schemes) will be responsible primarily for the preparation of subsidiary legislation regarding key aspects of the MPF Schemes including contribution, preservation, portability and withdrawal of benefits, registration and monitoring of MPF Schemes and Residual Provident Fund Schemes. In addition, he will be responsible for drawing up details for establishing the Compensation Fund and the MPF Appeal Board. To discharge these responsibilities, the incumbent of the post of AD/Schemes needs to be well-versed in policy formulation matters and legislative process, have good administrative experience, good inter-personal skills and the ability to communicate effectively. SFS therefore proposes that an AOSG “C” post be created to carry out these duties. The job description of the AD/Schemes post is at Enclosure 5.

8. The AD/Schemes will be supported by one Administrative Officer (AO), one Senior Insurance Officer (SIO), two Insurance Officers (IO) and a team of consultants working on the subsidiary legislation. The whole team will provide AD/Schemes with support in various technical areas as well as policy support including the drafting of papers for the Executive Council, Legislative Council and relevant panels and committees on the operation of MPF Schemes, the Compensation Fund and related issues; preparing briefs, drafting of papers and assisting in the formulation of strategy for discussion with China; and assisting in the finalisation of draft drafting instructions for the subsidiary legislation. The team will work closely with the Specialist Groups and prepare draft drafting instructions for further processing by the Law Draftsman. (Note: The Specialist Groups are consultative bodies to be formed with the objective of collecting views on the technical aspects of the MPF Schemes from relevant professional bodies and experienced individuals in the industries.)

The proposed post of AAssistant Director (Trustees and Interface)

9. The Assistant Director (Trustees and Interface) (AD/T & I) will be responsible primarily for the preparation of subsidiary legislation governing trustees, investment and interface with the Occupational Retirement Schemes Ordinance (ORSO). His major tasks relate to the operation of pension trustees, investment managers and retirement schemes service providers. Having regard to the technical nature of the issues under his portfolio, the incumbent of the AD/T & I post needs to have in-depth professional knowledge and hands-on experience in pension and retirement schemes matters, and possess experience in prudential supervision of financial institutions and management of retirement schemes. He should be familiar with the operation of pension trustees, investment managers, and other retirement schemes service providers. Such knowledge and experience are necessary for assessing the implications of the MPF System for the industries. SFS therefore considers that the incumbent should either be an actuary or accountant by profession; and having regard to these requirements, SFS feels that the appropriate grading and ranking of the post should be at the Assistant Commissioner of Insurance level (D2). The job description of the post of AD/T & I is at Enclosure 6.

10. The AD/T & I will be supported by one AO, one SIO and two IO posts and a team of consultants. The major tasks of the whole team include developing criteria for approval of trustees and their prudential supervision, drawing up restrictions on investment and guidelines on investment practices, working out the interface arrangements between the MPF Schemes and existing schemes under the ORSO and giving technical advice to the Director on matters pertaining to the operation of the MPF System.

The proposed post ofPrincipal Executive Officer (Administration and Planning)

11. The proposed PEO (Administration and Planning) will head the Administration and Planning Division which is responsible for providing the necessary administrative support for the MPFO and, more importantly, advising the Director on the institutional back-up for regulation of MPF schemes. For example, he will need to co-ordinate with the two Assistant Directors in developing preliminary ideas on the institutional arrangements for monitoring the administration of MPF Schemes and prudential supervision of service providers. The work involved includes developing ideas on the structure and operation of the future MPFA, co-ordinating efforts in developing technical specifications requirements of the computerised management information system, and mapping out preliminary human resource policy for staff of the future MPFA. In addition, he will assist the Director in carrying out a major review of the work progress of the MPFO scheduled for mid-1996 with a view to assessing the way forward for establishing the MPFA. The PEO will also be required to serve the Mandatory Provident Fund Advisory Board which advises on policy issues pertaining to the MPF Schemes. Members of the Board are non-officials. The job description of the proposed PEO post is at Enclosure 7.

12. In discharging his responsibilities, the PEO will need to co-ordinate with branches and departments at directorate level on matters related to the setting up of the MPFA. Given the crucial role of the post, and the required line of co-ordination, SFS considers that the incumbent needs to possess extensive knowledge of and experience in departmental administration, human resource, finance and budgeting matters, etc. He should also be of sufficient seniority in the Executive Officer Grade to be able to play an effective role in co-ordinating planning efforts in setting up the future MPFA. SFS therefore proposes to pitch the post at PEO (D1) level.

Review

13. SFS anticipates that the preparation of the subsidiary legislation will be largely complete by 1997. SFS will conduct a progress review in mid-1996 and make a report to the Legislative Council Panel on Financial Affairs in addition to other regular reports that the Panel may require from time to time. Thereafter, SFS will carry out a review of the four directorate posts in question with a view to ascertaining in the third quarter of 1996 the need for, and duration of, their retention.

Non-directorate posts

14. The preceding paragraphs have referred to the need for two AO, two SIO and four IO posts to underpin the AD/Schemes and AD/T&I. In addition to these eight non-directorate posts, SFS proposes to create 12 more non-directorate posts in different grades and ranks to provide the necessary administrative, technical, legal and general support. These 12 posts are: one Senior Crown Counsel (SCC) post for giving the necessary legal support and advice to the Director and two Assistant Directors on matters pertaining to the development of the subsidiary legislation; one Senior Executive Officer (SEO) post to assist the PEO (particularly in planning and public relations matters); one Senior Personal Secretary and two Personal Secretary I posts to provide secretarial support to the Director and the two Assistant Directors respectively; two Personal Secretary II posts to serve the PEO, SCC, SIOs, SEO and AOs; and lastly, a team of General and Common Grades staff (comprising one Chinese Language Officer I, one Clerical Officer II, one Typist and two Office Assistants) to provide translation services, administrative and general support to the Office.

15. A list of all the non-directorate posts proposed for creation is at Enclosure 8. Subject to Members’ approval of this proposal, the 20 non-directorate posts will be created through the departmental establishment machinery.

FINANCIAL IMPLICATIONS

16. The total notional annual salary cost of the four supernumerary Directorate posts at MID-POINT is $4,918,800 as follows:

17. The total additional notional annual mid-point salary cost of the proposed 20 non-Directorate posts is $8,343,360.

18. No provision has been included in the 1995-96 Estimates to meet the cost of this proposal. Should Members approve the proposal, supplementary provision for 1995-96 will be approved under delegated authority. The necessary provision for 1996-97 will be provided for in the context of the draft Estimates.

BACKGROUND INFORMATION

19. On 27 July 1995, the Legislative Council passed the Mandatory Provident Fund Schemes Bill, the enabling legislation outlining the main features of the MPF system. We aim to complete development of the subsidiary legislation by 1997.

20. A Working Group on MPF was set up under FSB on 1 September 1995 to prepare for the establishment of the MPFO and to start preparatory work required for drawing up the subsidiary legislation. For this purpose, four supernumerary directorate posts (one AOSG"B1", two AOSG"C" and one PEO) were created by SFS under delegated authority for a six-month period ending 29 February 1996.

21. The Finance Committee approved on 24 November 1995 the capital commitment of $22 million for engaging consultants to provide the necessary professional support for the preparation of the MPF Ordinance and accepted the financial implications of setting up the proposed MPFO. The consultants, with about 10 staff, will form an integral part of the MPFO which can only function effectively when incumbents of the civil service posts proposed in this paper and the consultants work together as a team.

CIVIL SERVICE BRANCH COMMENTS

22. Civil Service Branch (CSB) agrees that in order to take forward the proposal to establish the MPF Schemes, FSB needs considerable reinforcements. CSB agrees that the four proposed supernumerary directorate posts to man the MPFO up to February 1997 are required and justified. The grading and ranking of the proposed posts are appropriate.

23. CSB also supports the proposed increase in the ceiling placed on the total notional annual salary value to allow creation of non-directorate posts for the MPFO.

RECOMMENDATION OF THE STANDING COMMITTEE ON DIRECTORATE SALARIES, AND CONDITIONS OF SERVICE

24. As the four directorate posts are proposed on a supernumerary basis, their creation, if approved, will be reported to the Standing Committee on Directorate Salaries and Conditions of Service in accordance with agreed procedures.

Financial Services Branch
December 1995

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Enclosure 4 to EC (95-96)66

Job Description for irector, Mandatory Provident Fund Office (MPFO)

RANK : Administrative Officer Staff Grade “B1” (D4)

POST TITLE : Director, MPFO

MAJOR DUTIES AND RESPONSIBILITIES :

To be responsible to the Secretary for Financial Services for -

1. overseeing the running of the MPFO;
2. developing subsidiary legislation on MPF;
3. co-ordinating Government’s effort in the setting up of the MPF system as stated in the MPF Schemes Ordinance;
4. attending the relevant Legislative Council Panels and Committees to present proposals and answer questions on issues relating to MPF;
5. liaising with the key service providers on major issues pertaining to the setting up of the MPF system;
6. developing preliminary ideas on the institutional arrangement for monitoring the administration of MPF Schemes and prudential supervision of the service providers; and
7. setting up the MPF Advisory Board.

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Enclosure 5 to EC(95-96)66

Job Description for Assistant Director (MPF Schemes)

RANK : Administrative Officer Staff Grade “C” (D2)

POST TITLE : Assistant Director (MPF Schemes)

MAJOR DUTIES AND RESPONSIBILITIES :

To be responsible to the Director, MPFO for -

1. giving advice and assistance in developing the MPF system;
2. preparing subject papers and reports relating to MPF Schemes , for consultation with industry and other organisations, and submission to the Executive Council and Legislative Council;
3. reviewing and formulation of proposals for the registration and regulation of MPF Schemes;
4. preparing papers and formulation of strategy for discussion with China;
5. formulation of draft drafting instructions for rules and regulations on the MPF system, including withdrawal of accrued benefits, administration, management and maintenance of MPF Schemes, Residual Provident Fund Scheme, Compensation Fund, and exemption of specific persons; and
   
6. liaison with other government departments and branches, professional bodies and other interested organisations on matters pertaining to retirement schemes.

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Enclosure 6 to EC (95-96)66

Job Description for Assistant Director (Trustees and Interface)

RANK : Assistant Commissioner of Insurance (D2)

POST TITLE : Assistant Director (Trustees and Interface)

MAJOR DUTIES AND RESPONSIBILITIES :

To be responsible to the Director, MPFO for -

1. giving advice and assistance in developing the MPF system;
2. preparing subject papers and reports relating to trustees and interface with the Occupational Retirement Schemes Ordinance, for consultation with industry and other organisations, and submission to Executive Council and Legislative Council;
3. formulation of draft drafting instructions on criteria for approval of trustees, standards and guidelines for trustees, trustee’s covenants, investment guidelines as well as standards for investment managers and custodians; and criteria for exemption of ORSO schemes;
4. liaising closely with the industry, professional bodies, interested groups and relevant government offices on the technical aspects of retirement schemes and to devise the interface arrangement with the Occupational Retirement Schemes Ordinance; and
5. preparation of papers and formulation of strategy for discussion with China on relevant issues.

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Enclosure 7 to EC (95-96)66

Job Description for Principal Executive Officer (Administration and Planning)

RANK : Principal Executive Officer (D1)

POST TITLE : Principal Executive Officer (Administration and Planning)

MAJOR DUTIES AND RESPONSIBILITIES :

To be responsible to the Director, MPFO for -

1. co-ordinating efforts in developing ideas on institutional arrangement for monitoring the administration and management of MPF schemes;
2. conducting progress review in mid-1996;
3. planning for the setting up of the MPFA;
4. assessing and acquiring the necessary resources for setting up the MPFA ;
5. developing preliminary ideas on the structure of the future MPFA;
6. co-ordinating the development of technical specifications of the management information system for monitoring of future MPF schemes;
7. supporting and collating input for the MPF Advisory Board; and
8. handling public relation matters.

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Enclosure 8 to EC (95-96)66

List of non-directorate posts

Note : The NAMS value for 1995-96 is based on the salary level of 1994-95. When Finance Committee considered FCR (95-96)81 on the same subject, the NAMS value given was based on the salary level of 1995-96.

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