Mandatory Provident Fund Quiz 01

Correct: Under the Mandatory Provident Fund (MPF) regulations, an employer is required to enrol a relevant employee within the first 60 days of their employment. While the employer’s mandatory contributions (ERMC) begin accruing from the very first day of employment, the first payment is not due until the 10th day of the month following the one in which the 60th day of employment falls. For an employee starting on September 2, the 60th day of employment is October 31. Consequently, the first remittance deadline is November 10, and this payment must cover the entire period from the commencement of employment (September 2) to the end of the contribution period in which the 60th day falls (October 31).

**Incorrect:** Setting the deadline as October 10 for the September period is incorrect because the law allows the employer to wait until the 60-day enrolment window has passed before making the first remittance. Suggesting a deadline of November 10 that only covers the month of October is incorrect because the initial payment must be cumulative, including all employer contributions from the first day of work. A December 10 deadline is incorrect because it exceeds the statutory timeframe triggered by the 60th day of employment, which occurred in October.

**Takeaway:** The first remittance of employer mandatory contributions is triggered by the 60th day of employment and must consolidate all contributions from the employee’s start date up to the end of the contribution period containing that 60th day.

Correct: Statements I, II, and III accurately reflect the regulatory framework and fund requirements. The Securities and Futures Commission (SFC) is responsible for vetting disclosure in offering documents and marketing materials to ensure investor protection. Furthermore, all constituent funds must be governed by Hong Kong law, denominated in Hong Kong dollars, and made available to every member within the scheme to ensure equitable access to investment choices.

**Incorrect:** Statement IV is incorrect because the responsibility for licensing investment managers lies with the SFC, not the Mandatory Provident Fund Schemes Authority (MPFA). While the MPFA is responsible for the overall administration and registration of MPF schemes, the SFC oversees the qualifications and conduct of the managers through its licensing and authorization processes.

**Takeaway:** A clear division of labor exists between the MPFA and the SFC; the MPFA focuses on scheme registration and operational compliance, while the SFC focuses on product authorization, disclosure standards, and the licensing of investment managers. Therefore, statements I, II and III are correct.

Correct: To be registered as a subsidiary intermediary (SI) under the Mandatory Provident Fund Schemes Ordinance (MPFSO), an applicant must be a Type B regulatee (e.g., a licensed representative or a relevant individual) and must not be a Type A regulatee. The application must be accompanied by an attachment application from a principal intermediary. Additionally, the applicant must have passed the qualifying examination within one year prior to the application (unless they meet the three-year re-registration exemption) and must not have their Type B qualification currently suspended.

**Incorrect:** An applicant cannot register as an SI if they are only a Type A regulatee (as Type A refers to the corporate entity/institution). Furthermore, an individual cannot act as an independent SI; they must always be attached to a principal intermediary. A suspension of the underlying industry qualification (Type B status) or a revocation of MPF registration within the previous year would also lead to a failure to meet the registration criteria.

**Takeaway:** The registration of a subsidiary intermediary is contingent upon three main pillars: maintaining a valid underlying industry status (Type B regulatee), meeting competency requirements (examination or recent experience), and being formally attached to a registered principal intermediary. Therefore, all of the above statements are correct.

Correct: According to the Mandatory Provident Fund regulations regarding self-employed persons, if an individual cannot produce evidence of their relevant income (such as a Notice of Assessment) and the trustee is not satisfied with the reason for this lack of evidence, the relevant income is automatically deemed to be the maximum level of relevant income. Currently, this maximum level is set at $360,000 per year (or $30,000 per month). This serves as a default measure when a self-employed person fails to comply with income verification requirements without a valid justification.

**Incorrect:** The basic allowance under the Inland Revenue Ordinance is only used as the relevant income figure if the trustee is satisfied that the person truly cannot produce evidence and the person claims to earn less than the maximum level. The minimum level of relevant income ($85,200 per year) is the threshold below which mandatory contributions are not required, but it is not the default figure used when evidence is withheld without a satisfactory reason. There is no provision in the MPF Ordinance for determining income based on industry-specific statutory averages when documentation is missing.

**Takeaway:** For self-employed MPF members, failing to provide satisfactory evidence of income to the trustee results in the application of the maximum relevant income level ($360,000 per year) for the calculation of mandatory contributions.

Correct: Statements I, II, and IV are accurate descriptions of the MPF System and its place within the World Bank’s framework. The MPF System is categorized as Pillar Two because it is mandatory, privately managed, and fully funded. As a defined contribution scheme, the ultimate benefits are derived from the sum of contributions and the investment performance of the chosen funds. Furthermore, a salient characteristic of the MPF System is that all mandatory contributions are fully and immediately vested in the member upon payment.

**Incorrect:** Statement III is incorrect because, within the World Bank’s five-pillar framework, Pillar One refers to a mandatory, contributory, and publicly-managed system. Voluntary personal savings, such as private insurance or bank deposits, are classified under Pillar Three.

**Takeaway:** The MPF System functions as the second pillar of Hong Kong’s retirement protection, designed to complement other pillars like the social safety net (Pillar 0) and voluntary savings (Pillar 3) to provide comprehensive income security for the aged. Therefore, statements I, II and IV are correct.

Correct: Statement I is accurate because the Fund Fact Sheet acts as a performance report for constituent funds and is required to be issued on a half-yearly basis, containing details such as the fund expense ratio (FER) and investment objectives. Statement II is accurate as a “soft guarantee” in the MPF context is defined by the requirement for members to meet specific qualifying conditions, such as a minimum period of investment or a “career average” calculation, to benefit from the guarantee.

**Incorrect:** Statement III is incorrect because the maximum relevant income level for a casual employee who is a member of an industry scheme is $1,000 per day, not $30,000 per month (which is the limit for non-casual employees). Statement IV is incorrect because a Master Trust Scheme is specifically designed to be open to employees of different employers, self-employed persons, and personal account holders, whereas a scheme restricted to a single employer is known as an Employer-sponsored scheme.

**Takeaway:** MPF intermediaries must be able to distinguish between different scheme structures, the specific disclosure timelines for fund performance documents, and the distinct contribution limits applicable to casual versus non-casual employees. I & II only. Therefore, statements I and II are correct.

Correct: According to the principles of trust law and MPF regulations regarding recourse against trustees, a trustee is liable for a breach of trust if their actions (or failures to act) result in a loss or reduction of the trust property. In such instances, the trustee is required to restore the property at their own expense. They are strictly prohibited from using the assets of the MPF scheme to indemnify themselves against liabilities arising from their own mistakes or negligence, as they are the registered owners but not the beneficial owners of the assets.

**Incorrect:** It is incorrect to claim that administrative errors are treated as market risks, as market risks are external fluctuations while administrative errors fall under the trustee’s fiduciary responsibility. Suggesting that a trustee can use a scheme’s reserve fund or future investment returns to cover their own errors contradicts the fundamental duty to act solely in the interest of the beneficiaries and the requirement for the trustee to bear the cost of restoration personally. Furthermore, liability for a breach of trust does not depend solely on whether the act was intentional; negligence or failure to exercise due diligence also triggers the requirement for restoration.

**Takeaway:** MPF trustees have a fiduciary duty to manage scheme assets with a high degree of care; if a breach occurs that reduces the fund’s value, the trustee must personally compensate the scheme to restore it to its proper level.

Correct: According to the MPF Guidelines and the Mandatory Provident Fund Schemes Ordinance (MPFSO), a Responsible Officer (RO) carries the specific duty of ensuring that the principal intermediary (PI) has both established and continues to maintain robust internal controls and procedures. These systems must be designed to secure compliance with the conduct requirements set out in Part IVA of the MPFSO, covering the activities of both the PI itself and its subsidiary intermediaries (SIs).

**Incorrect:** Statement III is incorrect because the regulatory focus for a Responsible Officer is on the systemic oversight and the maintenance of a compliance framework, rather than the direct performance of individual administrative tasks such as personally verifying the identity of every client. While the RO must ensure that a system for client due diligence is in place, they are not mandated to execute every onboarding check themselves.

**Takeaway:** The core responsibility of an MPF Responsible Officer regarding compliance is to ensure the principal intermediary implements and sustains effective controls that govern the professional conduct of the firm and its representatives. Therefore, statements I, II and IV are correct.

Correct: Statements I, II, and III accurately reflect the conduct requirements for MPF principal intermediaries. Under the Guidelines, records concerning the conduct of regulated activities and required audio/written records must be retained for at least seven years. Furthermore, any identified non-compliance with the MPFSO or Guidelines must be reported to the frontline regulator and the MPFA within 14 working days. For serious matters, such as complaints involving criminal allegations like forgery or misappropriation, the intermediary is required to notify the regulators immediately.

**Incorrect:** Statement IV is incorrect because the Guidelines specifically require principal intermediaries to have arrangements in place to prevent subsidiary intermediaries from receiving cash payments or uncrossed cheques. This is a mandatory control measure designed to mitigate the risk of fraud and the misappropriation of client funds.

**Takeaway:** Principal intermediaries must maintain rigorous internal controls that include specific record-keeping durations (7 years), strict reporting timelines for compliance failures (14 working days), and immediate escalation of criminal complaints, while strictly prohibiting the handling of cash by subsidiary intermediaries. Therefore, statements I, II and III are correct.

Correct: Statements I, II, III, and IV accurately reflect the statutory powers of the Mandatory Provident Fund Schemes Authority (MPFA) when dealing with suspected or confirmed breaches by an approved trustee. The MPFA is empowered to direct remedial actions, initiate formal investigations, impose financial penalties that scale with the severity of the infraction, and take the significant step of suspending a trustee while appointing a temporary replacement to ensure the continued administration of the scheme.

**Incorrect:** None of the provided statements are incorrect. Each represents a specific regulatory tool available to the MPFA under the Mandatory Provident Fund Schemes Ordinance to maintain the integrity of the MPF system. Options that omit any of these statements fail to capture the full scope of the MPFA’s enforcement and supervisory capabilities.

**Takeaway:** The MPFA maintains a comprehensive suite of sanctions and penalties, ranging from administrative directions and financial penalties to the suspension or revocation of a trustee’s approval, ensuring that non-compliance is met with a proportionate regulatory response. I, II, III & IV. Therefore, I, II, III & IV is correct.

Correct: Under the Guidelines on Conduct of MPF Intermediaries, specifically regarding complaint handling, any complaint of a criminal nature (such as forgery of client documents or misappropriation of funds) or of a serious nature (such as unauthorized transfer of benefits) must be reported to the frontline regulator and the industry regulator immediately. This immediate notification is a critical safeguard to ensure that regulators can intervene promptly in cases of potential fraud or serious misconduct.

**Incorrect:** Reporting within 14 working days is the timeframe designated for general failures to comply with the Mandatory Provident Fund Schemes Ordinance (MPFSO) or its guidelines, but it does not apply to serious criminal allegations which require faster action. Waiting for the quarterly summary is incorrect because that is a routine administrative requirement for all complaints and does not satisfy the urgency required for criminal matters. Notifying only the MPFA within 7 working days is incorrect as the guidelines specifically require immediate notification to the frontline and industry regulators for these types of serious incidents.

**Takeaway:** While standard compliance failures are reported within 14 working days, any complaint involving criminal or serious misconduct, such as forgery, requires immediate notification to both the frontline and industry regulators.

Correct: Statements I and II accurately reflect the provisions under the Mandatory Provident Fund Schemes Ordinance regarding the extension of the contribution day. If the deadline falls on a Saturday, a public holiday, or a day with a gale or black rainstorm warning, it is automatically moved to the next following day that does not meet those criteria. Statement III is also correct, as employers are required to provide a monthly pay-record to employees within seven working days after the last contribution payment for that month to ensure transparency.

**Incorrect:** Statement IV is incorrect because self-employed persons (SEPs) have the legislative flexibility to choose their contribution frequency. They may opt to contribute either on a monthly or a yearly basis, provided they notify the scheme trustee of their choice at least 30 days before the end of the scheme’s financial period.

**Takeaway:** While the 60-day permitted period for enrollment is fixed, the actual contribution day for payments is subject to extensions for weekends and extreme weather, and employers must adhere to strict timelines for issuing pay-records. I, II & III only. Therefore, statements I, II and III are correct.

Correct: Under the Mandatory Provident Fund (MPF) regulations, if a self-employed person is unable to produce evidence of their relevant income (such as a Notice of Assessment) and the trustee is satisfied with the explanation for the lack of evidence, a specific default applies. If the individual claims their income is below the maximum relevant income level, their relevant income for contribution purposes is deemed to be the basic allowance as defined in the Inland Revenue Ordinance.

**Incorrect:** The maximum level of relevant income ($360,000 per year) is only applied as a default if the trustee is not satisfied with the reason provided for the lack of evidence. The minimum level of relevant income ($85,200 per year) serves as the threshold below which mandatory contributions are not required, but it is not the statutory figure used for deemed income in this specific evidence-lacking scenario. Trustees are not permitted to estimate income based on industry averages or other external benchmarks; they must adhere to the specific defaults set out in the MPF legislation.

**Takeaway:** When a self-employed person cannot provide income evidence but the trustee accepts their reasoning, the relevant income is automatically set to the statutory basic allowance, provided the person claims to earn less than the maximum cap.

Correct: In the context of MPF guaranteed funds, the guarantor often holds the discretionary power to retain a portion of the fund’s investment earnings. These retained earnings can be utilized in two primary ways: they may be taken as a profit for the guarantor as compensation for providing the guarantee, or they may be set aside to offset periods where the fund’s actual investment performance falls below the guaranteed level.

**Incorrect:** Long-term bond funds are actually more susceptible to interest rate movements than short-term funds, not less; generally, the longer the maturity, the higher the price volatility in response to rate changes. It is incorrect to state that reserve charges are prohibited, as these fees are commonly deducted from fund assets to cover the cost of the guarantee. Furthermore, while default risk is the major risk for guaranteed funds, guarantors are legally required to maintain sufficient assets as reserves or provisions to support their obligations, making the claim that they have no such requirement false.

**Takeaway:** Investors in MPF guaranteed funds should be aware that the security of a guarantee comes with specific costs, such as reserve charges and the potential retention of excess earnings by the guarantor, while bond fund investors must balance yield against interest rate sensitivity linked to the term to maturity.

Correct: Registered intermediaries, including subsidiary intermediaries, are legally obligated to notify the MPFA in writing of any changes to their name, address, or contact details within 7 working days of the change occurring. This requirement ensures that the MPFA maintains an accurate and up-to-date register of all persons authorized to carry on regulated activities. Under the Mandatory Provident Fund Schemes Ordinance, failing to provide this notice without a reasonable excuse is a summary offence punishable by a fine of $50,000.

**Incorrect:** Reporting changes only during the annual return cycle is insufficient, as the law mandates a specific 7-working-day window for updates to personal particulars. The 30-day period and the 10% surcharge are regulatory mechanisms specifically associated with the late payment of annual fees, not the reporting of contact information. While the MPFA has the power to suspend or revoke registration for various breaches, a fine of $50,000 is the specific statutory penalty for failing to report changes in contact details within the required 7-working-day timeframe.

**Takeaway:** To maintain regulatory compliance, subsidiary intermediaries must proactively report changes in their contact information or regulatory status to the MPFA within 7 working days to avoid criminal liability and significant fines.

Correct: Statements I, III, and IV accurately reflect the provisions of the Employee Choice Arrangement (ECA) and the Mandatory Provident Fund Schemes Ordinance. Under the ECA, employees are permitted to transfer the accrued benefits derived from their own mandatory contributions made during their current employment to a personal account of their choice once every calendar year. Furthermore, any accrued benefits from previous employment that are currently held in a contribution account can be transferred at any time. Voluntary contributions are governed by the specific trust deed and governing rules of the scheme, rather than the statutory transfer rights established under the ECA.

**Incorrect:** Statement II is incorrect because the ECA does not grant employees the right to transfer the employer’s portion of mandatory contributions while they are still in that specific employment. These employer-funded mandatory contributions must remain in the scheme selected by the employer until the employee ceases employment or another qualifying event occurs.

**Takeaway:** The Employee Choice Arrangement enhances the portability of MPF benefits by allowing members to manage their own mandatory contribution portion and past employment benefits, but it maintains the employer’s right to select the scheme for the employer’s own mandatory contribution portion during current employment. Therefore, statements I, III and IV are correct.

Correct: Statement II is accurate because the MPF legislation requires all constituent funds to be governed by Hong Kong law and denominated in Hong Kong dollars to ensure regulatory consistency. Statement III is also accurate as it reflects the specific transparency requirement for Master Trust and Industry schemes to publish unit prices at least monthly in both a leading English and Chinese daily newspaper in Hong Kong.

**Incorrect:** Statement I is incorrect because the Securities and Futures Commission (SFC), rather than the MPFA, is the body responsible for vetting and authorizing the disclosure of information in offering documents, advertisements, and marketing materials. Statement IV is incorrect because while most funds are unitized, the regulations provide an exception for constituent funds that are non-investment linked and provide investment guarantees.

**Takeaway:** Regulatory oversight of MPF products is a complementary effort where the SFC focuses on disclosure and marketing authorization, while the MPFA handles scheme registration and operational aspects. Constituent funds must adhere to specific structural requirements regarding jurisdiction, currency, and periodic price disclosure. II & III only. Therefore, statements II and III are correct.

Correct: Statement I is correct as the Fund Fact Sheet (FFS) is a mandatory disclosure document issued on a half-yearly basis containing the fund expense ratio, risk indicators, and performance data. Statement II is accurate because a soft guarantee requires members to fulfill specific criteria, such as a minimum period of investment or a “career average” condition, to receive the guaranteed return. Statement IV correctly identifies the current statutory maximum relevant income for non-casual employees as $30,000 per month for mandatory contribution calculations.

**Incorrect:** Statement III is incorrect because it describes an Employer Sponsored Scheme; a Master Trust Scheme is characterized by being open to employees of different, unrelated employers, as well as self-employed persons and personal account holders. Statement IV would be incorrect if it applied to casual employees in an industry scheme, whose maximum relevant income is calculated as $1,000 per day.

**Takeaway:** Understanding the distinction between conditional (soft) and unconditional (hard) guarantees, as well as the reporting frequency of Fund Fact Sheets and the eligibility criteria for different scheme types, is essential for MPF intermediaries when advising clients. Therefore, statements I, II and IV are correct.

Correct: According to the MPFA Guidelines, when a risk mismatch is identified between a client’s fund choice and their risk profile, a post-sale call must be conducted within seven working days. This call must be performed by an authorized person of the principal intermediary who was not the subsidiary intermediary involved in the transaction. Furthermore, the audio recording of this call (or related documentation) must be retained for a minimum period of seven years.

**Incorrect:** It is incorrect to state that the subsidiary intermediary who handled the case should conduct the call, as the guidelines require an independent authorized person for this process. The assertion that the transaction must be halted until the call is finished is also incorrect; the guidelines specify that processing the client’s instruction does not need to wait for the completion of the post-sale call. Additionally, if a principal intermediary lacks a recording system, they must arrange for the trustee or sponsor to conduct the call rather than waiving the requirement.

**Takeaway:** To ensure objective oversight in cases of risk mismatch, the post-sale call must be handled by an independent authorized person and documented for seven years, without delaying the execution of the client’s investment instructions.

Correct: According to the Mandatory Provident Fund (MPF) regulations regarding overseas employees, individuals who enter Hong Kong for employment with a visa for a period not exceeding 13 months are exempt from the MPF System. If the period of stay is subsequently extended beyond 13 months, the exemption remains in effect only for the initial 13-month period. From the first day of the 14th month of their stay in Hong Kong, the employee is no longer exempt and must be enrolled in an MPF scheme.

**Incorrect:** The exemption does not apply to the entire duration of the stay simply because the initial visa was for less than 13 months; the law specifically limits the exemption to the first 13 months. There is no requirement for the employer to make retrospective contributions for the period that was originally covered by the exemption. Additionally, because the exemption covers the first 13 months, requiring enrollment immediately at the start of the second year (the 13th month) would be premature, as the obligation only begins from the 14th month.

**Takeaway:** Overseas employees on employment visas are exempt from MPF for their first 13 months in Hong Kong; if their stay is extended beyond this limit, they must be enrolled in the MPF System starting from the 14th month.

Correct: Under the Employee Choice Arrangement (ECA), employees are permitted to transfer the accrued benefits arising from their own mandatory contributions made during their current employment from their contribution account to an MPF scheme of their own choice. This transfer can be performed in a lump sum once every calendar year, which refers to the period from January 1 to December 31.

**Incorrect:** The employer’s portion of mandatory contributions in the contribution account must remain in the original scheme chosen by the employer as long as the employment continues. Transfers are not limited to funds within the same scheme; the primary purpose of ECA is to allow portability to different trustees. There is no regulatory requirement for an employee to obtain their employer’s permission to exercise their rights under the ECA.

**Takeaway:** The ECA enhances member autonomy by allowing the transfer of the employee’s portion of mandatory contributions from the current employment’s contribution account to a preferred scheme once per calendar year.

Correct: Statements I, II, and III accurately reflect the regulatory considerations and risks associated with transferring MPF accrued benefits. The transfer process involves a period where the benefits are cashed out and not yet re-invested (time lag), exposing the member to market fluctuations and the risk of ‘selling low and buying high’. Furthermore, MPF funds operate on a forward pricing basis, meaning the actual transaction price is determined after the market closes. Members holding guaranteed funds must also be cautious, as transferring out before meeting specific criteria (such as a minimum investment period) can result in the forfeiture of guaranteed returns.

**Incorrect:** Statement IV is incorrect because the Mandatory Provident Fund Schemes Ordinance and related guidelines generally require the original (transferor) trustee to take all practicable steps to ensure the transfer is completed within 30 days after being notified of the transfer election, or within 30 days after the last contribution day for an employee ceasing employment, whichever is later. The 60-day timeframe mentioned in the statement is inconsistent with these requirements.

**Takeaway:** When electing to transfer MPF benefits, members should evaluate not only the fees and services of the new trustee but also the inherent market risks caused by the investment time lag and the potential impact on existing fund guarantees. Therefore, statements I, II and III are correct.

Correct: Registered intermediaries are strictly prohibited from accepting cash payments from clients for MPF contributions. Any payments made by cheque must be crossed and made payable specifically to the approved trustee or the registered scheme itself. Additionally, to ensure transparency and regulatory oversight, principal intermediaries are mandated to retain all records of regulated activities, including the rationale for advice provided and client acknowledgments, for a minimum period of seven years.

**Incorrect:** It is incorrect to suggest that cash can be accepted under any circumstances, such as with the issuance of a receipt, as this violates the safety protocols for client assets. Cheques should never be made payable to the intermediary or the principal intermediary firm. Furthermore, record-keeping durations of three or five years are insufficient under the current MPF regulations, which strictly require a seven-year retention period to facilitate inspections by frontline regulators.

**Takeaway:** To protect client interests and maintain market integrity, intermediaries must never handle cash, must ensure cheques are correctly payable to trustees, and must maintain comprehensive records of advice and transactions for at least seven years.

Correct: Statements I, II, and IV accurately reflect the regulations governing the withdrawal of MPF accrued benefits. Under the Mandatory Provident Fund Schemes Ordinance, medical certificates for terminal illness are valid if signed by either a registered medical practitioner or a registered Chinese medicine practitioner. For a small balance withdrawal, one of the statutory requirements is that at least 12 months must have elapsed since the last contribution day. Furthermore, in the event of a member’s death, the benefits form part of the estate and must be claimed by the personal representative or the Official Administrator.

**Incorrect:** Statement III is incorrect because the option to withdraw benefits by installments is strictly limited to members who attain the normal retirement age of 65 or the early retirement age of 60. For all other grounds of early withdrawal, including permanent departure from Hong Kong, total incapacity, terminal illness, and small balances, the law requires the benefits to be paid in a single lump sum.

**Takeaway:** While the MPF system is designed for retirement, specific early withdrawal grounds exist; however, the flexibility of installment payments is reserved solely for retirement-based claims, while other grounds require lump-sum distributions and specific evidentiary proof. Therefore, statements I, II and IV are correct.

Correct: All four statements accurately reflect the powers of the Mandatory Provident Fund Schemes Authority (MPFA) and the legal consequences for trustees under the MPF legislation. The MPFA has broad supervisory powers, including ordering remedial actions (I), imposing proportionate financial penalties (II), and suspending a trustee while appointing a temporary one (III). Furthermore, criminal sanctions for specific offences include a maximum fine of $200,000 and 2 years of imprisonment (IV).

**Incorrect:** There are no incorrect statements in this selection. Options that exclude any of these points are incomplete because they fail to account for the full range of statutory powers and penalties available to the regulator and the courts in the event of a breach by an approved trustee.

**Takeaway:** The MPFA maintains a robust enforcement framework that ranges from administrative remedial orders and financial penalties to severe criminal sanctions, including imprisonment and revocation of approval, to ensure trustee compliance and protect scheme members. Therefore, all of the above statements are correct.

Correct: Under the Mandatory Provident Fund legislation, a Statement of Investment Policy (SIP) must be maintained for every constituent fund and Approved Pooled Investment Fund (APIF). The primary purpose is to ensure transparency for scheme members. The SIP must explicitly state the investment objectives, the types of assets the fund may invest in, the asset allocation balance, the risk and expected return of the portfolio, and the policies regarding securities lending and the use of financial futures and options.

**Incorrect:** The statutory requirements for the Statement of Investment Policy do not include disclosing the specific names or professional qualifications of individual fund managers, as these are operational details rather than policy parameters. Similarly, while transparency is important, the SIP is a forward-looking policy document and is not required to list historical individual transactions or the specific selection criteria and fee structures for independent auditors, which are typically addressed in other scheme documents or annual reports.

**Takeaway:** The Statement of Investment Policy is a mandatory disclosure document that outlines the strategic framework, risk profile, and asset mix of an MPF fund to ensure members are well-informed about how their contributions are being managed.

Correct: Under the Mandatory Provident Fund Schemes Ordinance, a subsidiary intermediary is required to notify the MPFA in writing of any change in their address or contact details within 7 working days of the occurrence. Additionally, all registered intermediaries, including both principal and subsidiary intermediaries, are mandated to deliver an annual return to the MPFA within one month after the last day of the reporting period. Failure to comply with the annual return requirement can lead to the suspension of the intermediary’s registration.

**Incorrect:** Timelines such as 14 working days or 30 days for reporting contact detail changes are inconsistent with the statutory requirement of 7 working days. The assertion that annual returns are only mandatory for principal intermediaries is incorrect, as the law applies this obligation to all registered intermediaries. Furthermore, the MPFA does not immediately revoke registration for a missed filing; instead, it follows a process of suspension, with revocation only occurring if the failure is not rectified within a specified period (usually 30 days) after the suspension begins.

**Takeaway:** Registered intermediaries must strictly observe the 7-working-day notification window for changes in personal or contact information and ensure annual returns are submitted within one month of the period end to maintain their registration status.