Mandatory Provident Fund Schemes Examination

A person makes a “material decision” if the person makes a decision in relation to the following matters:
(i) whether, or when, to apply to join or become a member of a particular MPF scheme;
(ii) whether, or when, to apply to participate in a particular MPF scheme as an employer;
(iii) whether, or when, to pay contributions to a particular MPF scheme, or to invest in a particular constituent fund of an MPF scheme;
(iv) the amount of contributions to be paid to a particular MPF scheme, or the amount to be invested in a particular constituent fund of an MPF scheme;
(v) whether, or when, to transfer accrued benefits from a particular MPF scheme to another particular MPF scheme, or from a particular constituent fund of an MPF scheme to another particular constituent fund of the MPF scheme;
(vi) the amount of accrued benefits to be transferred from a particular MPF scheme to another particular MPF scheme, or from a particular constituent fund of an MPF scheme to another particular constituent fund of the MPF scheme;
(vii) whether, or when, to transfer benefits from an occupational retirement scheme to a particular MPF scheme;
(viii) the amount of benefits to be transferred from an occupational retirement scheme to a particular MPF scheme;
(ix) whether, or when, to make a claim for the payment of accrued benefits from an MPF scheme; and
(x) the amount of a claim for the payment of accrued benefits from an MPF scheme.

A “regulated person” means (i) a registered intermediary (i.e., a principal intermediary or a subsidiary intermediary); or (ii) a responsible officer of a principal intermediary.

A mixed assets fund, which is also called a balanced fund, is an investment mix of bonds and equities (stocks). A typical mixed assets fund invests in both stock markets and bond markets, either globally or regionally (e.g. Asia or North American), in order to reduce the overall risk as well as to take advantage of investment opportunities in different markets and economies. Therefore, the risk level of this kind of fund is usually somewhere between that of a bond fund and an equity fund. Due to the investment mix of the fund, the expected return of a mixed assets fund is usually higher than that of a bond fund but lower than that of an equity fund.

The approval requirements in respect of a corporate trustee include:
(i) Capital adequacy and financial soundness
Corporate trustees must have paid-up share capital and net assets of at least $150 million each.
(ii) Suitability
(iii) Capability
(iv) Presence and control

A scheme member may choose not to exercise the right to transfer the accrued benefits. However, if a member decides to exercise such right, he/she should consider the following factors:
Trustee/scheme
 Range and quality of services
 Fees and charges
 Choices and suitability of funds

For relevant employees (other than casual employees) earning more than the maximum relevant income level (i.e. $30,000 per month), the employees’ mandatory contributions and the employers’ mandatory contributions are each capped at $1,500 per month. With any amount of relevant income, however, both the employer and the relevant employee can opt to make voluntary contributions. However, the amount of the employer’s voluntary contributions does not have to match the relevant employee’s amount.

The trustee of an MPF scheme is the central party responsible for all scheme administration and management functions. The appointed service providers are listed below:
(a) Investment Managers
(b) Custodians
(c) MPF Intermediaries

There are three types of MPF scheme:
(a) Employer Sponsored Scheme
(b) Master Trust Scheme
(c) Industry Scheme

The key characteristics of the MPF System are as follows:
(a) Mandatory participation
(b) Employment-based
(c) Defined contribution
(d) Privately-managed
(e) Fully-funded

The MPF System is employment-based. Under the MPF System, employers select MPF trustee(s), join one or more schemes, and then enroll their relevant employees in the chosen scheme(s). Relevant employees then choose among the funds offered by the scheme(s) chosen by their employers. Relevant employees and their employers are required to make regular mandatory contributions. Self-employed persons enroll in a scheme of their own choice, regardless of their level of income, unless they are exempt persons.