For discussion EC(96-97)52
on 29 January 1997

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 retention of the following supernumerary directorate posts in the Financial Services Branch for a period of 13 months from
1 March 1997 to 31 March 1998 -

1 Administrative Officer Staff Grade B1
(D4) ($135,800 - $139,950)

1 Administrative Officer Staff Grade C
(D2) ($102,900 - $109,250)

1 Assistant Commissioner of Insurance
(D2) ($102,900 - $109,250)

1 Principal Executive Officer
(D1) ($86,650 - $91,950)

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PROBLEM
PROPOSAL
JUSTIFICATION

The Review

• Progress of the MPFO’s work
• Resource Requirements
FINANCIAL IMPLICATIONS
BACKGROUND INFORMATION
CIVIL SERVICE BRANCH COMMENTS
ADVICE OF THE STANDING COMMITTEE ON DIRECTORATE SALARIES AND CONDITIONS OF SERVICE
Existing Job Description for Director, Mandatory Provident Fund Office (MPFO)
Existing Job Description for Assistant Director (Scheme Operations)
Existing Job Description for Assistant Director (Regulatory Standards)
Existing Job Description for Principal Executive Officer (Administration and Planning)
ProposedRevised Job Description for Director, Mandatory Provident Fund Office (MPFO)
Proposed Revised Job Description for Assistant Director (Scheme Operations)
ProposedRevised Job Description for Assistant Director (Regulatory Standards)
ProposedRevised Job Description for Principal Executive Officer (Administration and Planning)
List of Non-Directorate Posts

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PROBLEM

We need to retain the existing civil service staff in the Mandatory Provident Fund Office (MPFO) in order to continue with work on the development of the Mandatory Provident Fund (MPF) System.

PROPOSAL

2. The Secretary for Financial Services (SFS) proposes to retain for 13 months, that is, from 1 March 1997 to year 1997/-31 March 1998, all 25 existing civil service posts in the MPFO of which the following four are directorate posts - 21 non-directorate posts and

1. one Administrative Officer Staff Grade B1 (AOSG B1) (D4);
2. one Administrative Officer Staff Grade C (AOSGC) (D2);
3. one Assistant Commissioner of Insurance (ACI) (D2); and
4. one Principal Executive Officer (PEO) (D1).

JUSTIFICATION

3. At its meeting held on 9 February 1996, Finance Committee (FC) approved, inter alia, the establishment of the MPFO to proceed with the preparation of subsidiary legislation under the Mandatory Provident Fund Schemes Ordinance (MPF Ordinance) and other tasks relating to the development of the System. We set up the MPFO on a temporary basis, initially for a period of one year, and undertook to carry out a review towards the end of 1996 to consider the continued need for the retention of the above four directorate posts. The existing organisation charts of the Financial Services Branch (FSB) and MPFO are at Enclosures 1 and 2 respectively.

The Review

Progress of the MPFO’s work

4. We have reviewed the work carried out by the MPFO, the difficulties and problems encountered in the development of the MPF System and the MPFO’s revised work programmeresource implications. The review shows that the MPFO has made very good progress on programme on the development of subsidiary legislation under the MPF Ordinance. The Office has set up a formal advisory structure, comprising the Mandatory Provident Fund Advisory Board and six Specialist Groups, to render assistance on various aspects of its work., and tTheis arrangement is functioning smoothly. The MPFO has also since resolved numerous technical issues relating to MPF scheme operations, including, for example, scheme registration, calculation and payment of contributions, record keeping, disclosure of information, method of dealing with default contributions, and mechanism relating to the transfer and withdrawal of accrued benefits.

5. The next stage of the exercise is to finalisecomplete the subsidiarydrafting ofsubisdiary legislation and to resolve complicated and contentious issues, such as the provisions relating to portability, industry schemes, the Residual Provident Fund Scheme and the handling of small accounts. In many areas,where the MPFO has already developed although proposals for draft regulations, but there is still a need to draw up guidance notes for employers/employees, MPF trustees and other parties concerned so as to facilitate compliance with the legislation. In addition, there is a need to develop very detailed internal operation manuals and guidelineswill need to be developed for the regulation, administration and monitoring of the System.

6. In addition to the legislative and regulatory side of the work, other major tasks that the MPFO needs to embark on include consultation with interested parties and professional bodies with a view to fine-tuning the arrangements for the implementation of the MPF System; launching of intensive publicity and educational programmes to promote the MPF System with particular emphasis on the implications for members of the workforce; preparation for the setting up of the institutional arrangements for the implementation of the MPF System, including the establishment of the MPF Authority; setting up of a computeriszed management information system for monitoring future MPF Schemes; and development of the human resource programmes necessary for the smooth introduction of MPF.

Resource Requirements

7. Having regard to the projected workload of the Office, we recommend retaining the existing civil service staffing complement service posts of the MPFO. It is not practical to reduce the size of the MPFO’s civil service team as there is a pressing need for these staff to continue with their work on setting up the MPF Systemvery complicated and complex issues. However, with the change in work focus we propose revising the job descriptions of the four directorate posts. The existing and the proposedrevised job descriptions of the posts arerevised as at Enclosures 3 and 4 respectively.

8. Members will note from Enclosure II2 that the consultant staff work alongside the civil service staff of the Office in an integrated team. Nevertheless, given the shift in focus of the work of the Office, and the transfer of expertise that has taken place between the consultants and the civil service staff, we consider that the need for professional input from consultants will diminish. SFS therefore plans to retain only two out of the existing 10 consultant staff for a further period of about four months after the expiry of the existing consultancy contract in mid-February 1997 to deal with the outstanding work and assist in the development of internal operational system for the future MPF Authority. SFS estimates that the total costs of the consultancy including the planned extension will not exceed the approved commitment of $22 million approved by Members vide FCR(95-96)81.

9. The proposed organisation chart of the MPF Office is at Enclosure 5.

FINANCIAL IMPLICATIONS

10. The additional notional annual salary cost of the four supernumerary directorate posts at mid-point is $5,296,200 as follows -

The total full annual average staff cost of these four posts, including salaries and staff on-cost, is $9,513,708.

11. Should Members approve the proposed retention of the four supernumerary directorate posts, we shall also retain the 21 non-directorate posts in the MPFO in order to ensure that the directorate officers have the necessary support. in the draft Estimates for 1997-98 for the purpose. A list of the 21 non-directorate posts is at Enclosure 6. The total notional annual mid-point salary of the 21 non-directorate posts is $9,566,220 and the total full annual average staff cost, including salaries and staff on-cost, these posts is $13,731,312.

12. Should Members approve the proposal, we shawill approve supplementary provision required for 1996-97 under delegated authority and delete an equivalent amount from Head 106 - Miscellaneous Services Subhead 251 Additional commitments. Sufficient provision will be included in the draft Estimates for 1997-98 to We will also include sufficient p meet the costs of the proposal.

BACKGROUND INFORMATION

13. Following the enactment of the MPF Ordinance in August 1995, SFS set up a working group on MPF within FSB to prepare for the development of the subsidiary legislation under the MPF Ordinance. At the FC meeting held on 24 November 1995, Members approved a commitment of $22 million for engaging consultants to provide the necessary professional support for the preparation of the required subsidiary legislation. On 9 February 1996, FC approved the creation of the 25 supernumerary civil service posts to staff the MPFO which is responsible for making preparation for the implementation of the MPF System.

14. Since its inception, the MPFO has made very good progress in its work. The Office is now in the stage of finalising the drafting instructions for the necessary subsidiary legislation. At the same time, the Office has started briefing the relevant LegCo panel/sub-committee on the legislative proposals. SFS aims to introduce the draft legislation to LegCo in April 1997.

CIVIL SERVICE BRANCH COMMENTS

15. Civil Service Branch agrees that the four supernumerary directorate posts should be extended for 13 months to enable the MPFO to continue with its work. The grading and ranking of the posts are appropriate.

ADVICE OF THE STANDING COMMITTEE ON DIRECTORATE SALARIES AND CONDITIONS OF SERVICE

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

Financial Services Branch
January 1997
(E5464/WIN95)

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Enclosure 3(a) to EC (96-97)52

Existing Job Description for Director, 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. setting up the MPF Advisory Board, Panel of Specialists and Specialist Groups; and undertaking consultation with relevant industrial, professional and political bodies;.
5. liaising with the key service providers on major issues pertaining to the setting up of the MPF system; and
6. developing preliminary ideas on the institutional arrangement for monitoring the administration of MPF Schemes and prudential supervision of the service providers.

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Enclosure 3(b) to EC (96-97)52

Existing Job Description for Assistant Director (Scheme Operations)

Rank : Administrative Officer Staff Grade "C" (D2)

Post Title : Assistant Director (Scheme Operations)

Major Duties and Responsibilities :

To be responsible to the Director, MPFO for -

1. giving advice and assistance in developing the MPF system;
2. preparing proposalproposalsubject papers and reports relating to MPF Schemes , for consultation with the industry and other organisations, and submissions to the Executive Council and Legislative Council;
3. reviewing and formulation of proposals for the registration and regulation of MPF Schemes;
4. 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
5. liaisingliaisingon with other government departments and branches, professional bodies and other interested organisations on matters pertaining to retirement schemes.

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Enclosure 3(c) to EC (96-97)52

Existing Job Description for Assistant Director (Regulatory Standards)

Rank : Assistant Commissioner of Insurance (D2)

Post Title : Assistant Director (Regulatory Standards)

Major Duties and Responsibilities :

To be responsible to the Director, MPFO for -

1. giving advice and assistance in developing the MPF system;
2. preparing proposalproposalsubject papers and reports relating to trustees and interface with the Occupational Retirement Schemes Ordinance, for consultation with industry and other organisations, and submissions 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; and
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.

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Enclosure 3(d) to EC (96-97)52

Existing 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 the 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 MPF Authority (MPFA);
4. assessing and acquiring the necessary resources forresourcesfor setting up the MPFA ;
5. developing preliminary ideas on the structure of the future organisation;
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 4(a) to EC (96-97)52

ProposedRevised Job Description for Director, 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. finalising the development of the MPF subsidiary legislation;
3. co-ordinating Government’s effort in the setting up of the MPF System;
4. undertaking consultation with relevant industries, professional bodies, and relevant supervisory bodies e.g. Securities and Futures Commission, Hong Kong Monetary Authority, etc. with a view to fine-tuning the arrangements for the implementation of the MPF System; and
5. mapping out the structure and organisation of the MPFA for monitoring the administration of MPF Schemes and the prudential supervision of the service providers.

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Enclosure 4(b) to EC (96-97)52

ProposedRevised Job Description for Assistant Director (Scheme Operations)

Rank : Administrative Officer Staff Grade C (D2)

Post Title : Assistant Director (Scheme Operations)

Major Duties and Responsibilities :

To be responsible to the Director, MPFO for -

1. giving advice on and assistance in implementing the MPF System;
2. dealing with all matters relating to the scheme operation aspects of the MPF System, such as the withdrawal of accrued benefits, administration, management and maintenance of MPF Schemes, Residual Provident Fund Scheme, Industry Schemes, Compensation Fund and exemption of specific persons; and steering through the legislative programme for the related subsidiary legislation;
3. preparing regulations, rules and administrative guidelines on the registration and regulation of MPF Schemes;
4. liaising with other government departments and branches, industries, professional bodies and interested organisations on matters pertaining to the operation of MPF Schemes; and
5. developing the internal operational system and working manuals for subjects concerning scheme operations for the future MPFA.

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Enclosure 4(c) to EC (96-97)52

ProposedRevised Job Description for Assistant Director (Regulatory Standards)

Rank : Assistant Commissioner of Insurance (D2)

Post Title : Assistant Director (Regulatory Standards)

Major Duties and Responsibilities :

To be responsible to the Director, MPFO for -

1. giving advice on and assistance in implementing the MPF System;
2. dealing with matters relating to criteria for approval of trustees, standards and guidelines for trustees, trustee’s covenants, investment guidelines as well as interface of existing Occupational Retirement Schemes Ordinance (ORSO) schemes with MPF Schemes; and steering through the legislative programme for the related subsidiary legislation;
3. liaising closely with the industries, professional bodies, interested groups, Securities and Futures Commission and relevant government departments on the technical aspects of the MPF System;
4. preparing regulations and rules on the prudential regulation and supervision of MPF trustees, and drawing up investment standards and guidelines for investment managers and custodians; and
5. developing the internal operational system and working manuals for subjects relating to regulatory standards for the future MPFA.

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Enclosure 4(d) to EC (96-97)52

ProposedRevised 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. planning the setting up of the MPFA including assessing and acquiring the necessary resources and developing preliminary ideas on the structure of the future organisation;
2. co-ordinating efforts in the development of internal operational system and working manuals for the MPFA;
3. preparing to establish a computerised management information system for monitoring of future MPF Schemes;
4. developing human resource programmes for recruitment and training of staff of the future MPF Authority, and subsequent implementation of the programme;
5. supporting and collating input for the MPF Advisory Board; and
6. handling public relation matters.

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Enclosure 6 to EC (96-97)52

List of Non-Directorate Posts

(E5464/WIN95)

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