LegCo Subcommittee on MPF System
Information Note
ORSO Interface - An Overview

Purpose

This paper gives an overview of the information notes on the arrangements for ORSO schemes to interface with the MPF System.

The ORSO Situation

2. There are about 17,000 ORSO schemes voluntarily established by employers covering more than 800,000 employees or slightly over 1/4 of the work force. These schemes are subject to the requirements as set out in the Occupational Retirement Schemes Ordinance ("the ORSO").

3. The requirements stipulated by the ORSO are very different from those of Mandatory Provident Fund Schemes Ordinance ("the MPFSO") since ORSO is formulated for voluntary arrangements and MPF is a mandatory system. Our key objective is to develop interface arrangements for ORSO schemes which will have minimum interference to their scheme arrangements.

Proposals

4. The proposed interface arrangements are set out after consultation with the Employer Groups. There will be two sets of exemption criteria with respect to schemes that are registered under ORSO ("ORSO registered schemes") and schemes which have been granted exemption from ORSO ("ORSO exempted schemes").

5. Detailed proposals are described in the following papers :

  1. Exemption Criteria for ORSO Registered Schemes - a summary of the requirements and standards to be met by an ORSO registered scheme in order to be exempt from the MPF System which includes the transition date of 15 October 1995, minimum standards on trusteeship and investments, grandfathering of existing members, preservation and portability requirements on new members, one-off option for existing members and new members to choose between ORSO schemes and MPF coverage.
  2. Exemption Criteria for ORSO Exempted Schemes - a summary of the requirements to be met by an ORSO exempted scheme in order to be exempt from the MPF System which includes grandfathering of existing members and the one-off option for existing members and new members to choose between ORSO schemes and MPF coverage.
  3. Minimum Standards on Trusteeship and Investments - minimum standards to be met by trustees and investment advisers, and minimum standards on scheme investments.
  4. Disclosure Requirements in connection with Employees’ Option - information to be disclosed to employees to facilitate them to choose between the ORSO schemes and MPF coverage.
  5. On-going Requirements - treatment of accrued rights under the ORSO scheme of existing members who decided to opt for MPF coverage ("opted-out" members), reduction of future benefits and approval of successor schemes.
  6. Impact on Employers and Employees - an analysis of the impact of interface arrangements on the employers who sponsor an ORSO scheme, on the members of these schemes and on those employees who are not a member of an ORSO scheme.
  7. Options Available for Employers - an analysis of the options available, other than applying for exemption from MPF System, for employers who are sponsoring an ORSO scheme.

6. Papers concerning the topics in (a) - (c) above are being issued for the Sub-committee meeting on 14th January, while those for papers (d) - (g) above will be issued for the Sub-committee meeting on 20th January.

Mandatory Provident Fund Office
Financial Services Branch
8 January 1997
[Ref.: Paper/MPF/SC-OI-1]

Last Updated on {{PUBLISH AUTO[[DATE("d mmm, yyyy")]]}}