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Following is a question by the Hon Li Fung-ying and a written reply by the Secretary for the Civil Service, Miss Denise Yue, in the Legislative Council today (January 14):
Question:
Regarding the impact of the financial tsunami on the Civil Service Provident Fund (CSPF) Scheme, will the Government inform this Council:
(a) of the rates of return on investment of various funds under the CSPF Scheme in the past 12 months; and
(b) as it has been reported that since December last year, the Hospital Authority has provided its staff the option of withholding the withdrawal of their provident funds upon retirement or leaving the service and keeping their provident fund accounts for a maximum period of five years in the hope that better returns may be gained in the future, whether the Government has plans to provide similar options for civil servants; if it has, of the details of such plans; if not, the reasons for that?
Reply:
President,
By way of background, the Civil Service Provident Fund Scheme (CSPF) is set up by the Government as the retirement benefit system for civil servants recruited on or after June 1, 2000 and appointed on new permanent terms. Under the CSPF, there are three approved master trust schemes (MTSs) selected by the Government from time to time to provide services to CSPF members. The three MTSs are mandatory provident fund (MPF) schemes set up and approved under the MPF Schemes Ordinance (MPFSO)(Cap. 485). Each MTS has its own governing rules and constituent funds and each constituent fund (CF) has its own investment policy in accordance with the provisions of the MPFSO. Each of the existing three MTSs offers seven or 10 CFs which can broadly be classified into six types having regard to the level of risk of investment. Individual CSPF members can choose to join one of the three MTSs, and to choose from the different types of CFs in their respective MTS or make changes to their choices of CFs within the same MTS according to the arrangements stipulated under the relevant MTS; or change from one MTS to another. The investment return for an individual CSPF member depends on his/her investment decisions at different point of time.
Referring to part (a) of the question, the six broad types of CFs available to CSPF members are Capital Preservation Fund, Money Market Fund, Guaranteed Fund, Bond Fund, Mixed Assets Fund and Equity Fund. The investment return rate of each CF depends on the fund's investment objectives and instruments, and the markets in which it is invested. The performance of the CFs of the three MTSs joined by CSPF members is generally in line with the performance trend of the same type of MPF funds. The performance, calculated on the basis of net asset value over the past twelve months (ended December 31, 2008), ranges from 4% (Guaranteed Fund) to -52% (Equity Fund). The performance of the different types of CF is at Annex.
Referring to part (b) of the question, the Hospital Authority Provident Fund Scheme (HAPFS) is a defined contribution scheme registered under the Occupational Retirement Schemes Ordinance (ORSO)(Cap. 426). It operates according to the Trust Deed and Rules of the Scheme and provides benefits to the employees of the Hospital Authority (HA). Before December 1, 2008, a HAPFS member normally had to cease his/her membership on the date that his/her employment with the HA ceased. To allow members of the HAPFS to have greater flexibility, the Trustees of the HAPFS and the HA have introduced an enhancement initiative with effect from December 1, 2008, which allows HAPFS members to remain in the Scheme for a period of up to five years from the date of cessation of employment with the HA, if they wish and to redeem their benefits any time within the five-year extension period. The introduction of this initiative is provided for by the Trust Deed and the Rules of the HAPFS.
Although the HAPFS and the CSPF are both retirement schemes set up for employees, they are different in that the HAPFS is operated under the ORSO while the CSPF is operated under the MPFSO; and the operations of ORSO and MPF schemes are different. For example, under the MPFSO which governs the MTS under the CSPF, accrued benefits derived from mandatory contributions can only be claimed for payment when members reach the age of 65 (except for early retirement at the age 60 or under special circumstances such as permanent departure from Hong Kong, death or permanent incapacity). For ORSO scheme such as the HAPFS, accrued benefits are claim for payment (unless otherwise provided) when members leave the service of the participating employer.
As the CSPF is provided for civil servants recruited on or after June 1, 2000, most of the CSPF members are at a relatively young age, and so there will be a long investment period before they are eligible to withdraw accrued benefits derived from mandatory contributions. Moreover, according to the governing rules of the MTSs, CSPF members, when becoming eligible to claim accrued benefits upon retirement or termination of service, can choose to become a preserved account-holder of the concerned MTS and retain such accrued benefits in the MTS. Their investment return will only be realised when they eventually withdraw their benefits at a time chosen by them. In view of this, there is no need for the Government to provide an option to CSPF members similar to the five-year extension period available to HAPFS members.
Ends/Wednesday, January 14, 2009
Issued at HKT 15:46
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