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Following is the speech by the Secretary for Financial Services, Mr Rafael Hui, in moving the second reading of the Occupational Retirement Schemes (Amendment) Bill 1999 in the Legislative Council today (Wednesday):

Madam President,

I move that the Occupational Retirement Schemes (Amendment) Bill 1999 be read the second time.

As you all know, the Government is working hard on the Mandatory Provident Fund (MPF) System which is to be implemented shortly. According to the implementation timetable set by the Mandatory Provident Fund Schemes Authority, the Authority will start processing applications of schemes established under the Occupational Retirement Schemes Ordinance (ORSO) for exemption from the MPF System early next year. However, some people in the legal profession are doubtful as to whether an ORSO scheme, which has undergone certain changes, is still qualified for application for MPF exemption. The Occupational Retirement Schemes (Amendment) Bill 1999 seeks to explain clearly the eligibility of an ORSO scheme for exemption. This would clear up doubts of some people in the legal profession and certain employers, so as to facilitate the latter in making timely preparation for the implementation of the MPF System.

In drawing up the MPF System, it is our policy intention to allow those insurance-based ORSO registered schemes which were established on or before 15 October 1995 as required by the MPF Schemes (Exemption) Regulation to seek exemption under the Mandatory Provident Fund Schemes Ordinance (MPFSO) upon their conversion into schemes governed by trust.

For an ORSO scheme which is a participating scheme of a pooling agreement, such a conversion entails a change of its pooling agreement. As such, the scheme will need to apply for registration again under the ORSO. Some people in the legal profession are concerned that such re-registration would affect the scheme's eligibility for MPF exemption.

In fact, so long as the changes to an ORSO scheme are not prohibited by the ORSO, and that the scheme is not terminated with the benefits payable to the scheme members, the eligibility of the scheme for application for MPF exemption would not be affected.

In order to clarify the policy intention of the Government so as to clear up doubts of certain people in the legal profession, the Bill proposes to add three subsections to the interpretation clause of the ORSO to elaborate the exemption eligibility of the relevant schemes under the MPFSO.

The Bill will help employers of the relevant ORSO registered schemes prepare for the imminent implementation of the MPF System. I urge Members to support the Bill.

Thank you.

End/Wednesday, June 16, 1999

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