Mandatory Provident Fund Quiz 25

Correct: Under the Mandatory Provident Fund Schemes Ordinance (MPFSO), specific penalties are prescribed for non-compliance with investigation requirements. When an officer of a company, acting with the intent to defraud, causes or allows the company to provide false or misleading records or documents during an MPFA investigation, the offence is treated with high severity. Upon conviction on indictment, the maximum penalty is a fine of $1,000,000 and imprisonment for 7 years.

**Incorrect:** A fine of $1,000,000 and 2 years of imprisonment is the maximum penalty for providing false or misleading information when the person knows the information is false or is reckless as to its truth, but where the specific element of ‘intent to defraud’ is not proven or required for that specific sub-clause. A fine of $100,000 and 6 months of imprisonment represents the maximum penalty for these offences upon summary conviction, rather than conviction on indictment. A fine of $10,000,000 is the maximum pecuniary penalty the MPFA may impose as a disciplinary order for a failure to comply with performance requirements, which is distinct from criminal penalties for fraud during investigations.

**Takeaway:** The MPFSO distinguishes between providing false information recklessly and doing so with a specific intent to defraud; the latter carries a much heavier maximum prison sentence of 7 years upon conviction on indictment to reflect the gravity of the misconduct.

Correct: Under the Mandatory Provident Fund Schemes Ordinance, relevant income for an employee includes almost all forms of monetary remuneration paid in consideration of employment, such as wages, salary, leave pay, and bonuses. However, statutory severance payments and long service payments made under the Employment Ordinance (Cap. 57) are specifically excluded from the definition of relevant income and should not be included in the calculation of mandatory contributions.

**Incorrect:** Base salary, performance-related bonuses, and accumulated annual leave pay are all explicitly listed as components of relevant income because they are monetary payments made by the employer to the employee in consideration of their employment. These items must be included when determining the total relevant income for both employer and employee mandatory contribution purposes.

**Takeaway:** While most forms of employment-related monetary compensation are classified as relevant income for MPF purposes, statutory payments for severance or long service are notable exceptions that are excluded from contribution calculations.

Correct: Statements II, III, and IV accurately reflect the portability provisions of the MPF system. When a relevant employee ceases employment, they are entitled to transfer the entirety of their accrued benefits (including both employer and employee mandatory contributions) to a personal account or a new employer’s scheme. Furthermore, trustees are mandated to process such transfers within a 30-day timeframe to protect member interests. Self-employed persons also have the statutory right to transfer their benefits between schemes at any time.

**Incorrect:** Statement I is incorrect because the Employee Choice Arrangement (ECA) only permits the transfer of the employee’s portion of mandatory contributions derived from current employment. The employer’s portion of mandatory contributions must remain in the original scheme selected by the employer as long as the employment relationship continues.

**Takeaway:** While the MPF system promotes portability, the Employee Choice Arrangement is restricted to the employee’s own mandatory contribution portion; full portability of all accrued benefits is only triggered upon the cessation of employment or for self-employed individuals. Therefore, statements II, III and IV are correct.

Correct: Under the Mandatory Provident Fund Schemes (General) Regulation and the MPFA Guidelines on Internal Control Report for Each Registered Scheme (Guideline II.6), approved trustees are required to maintain a robust internal control system. For each financial year of a scheme, the trustee must prepare a report on internal controls and engage an auditor to examine these controls. The auditor is then required to provide a report stating whether, in their opinion, the trustee has maintained effective internal control systems to ensure compliance with the relevant statutory requirements and guidelines.

**Incorrect:** The requirement for an internal control report is an annual statutory obligation, not a quarterly self-assessment. While investment managers must have their own controls, the primary responsibility for the registered scheme’s internal control report rests with the trustee, and the report is submitted to the MPFA rather than the SFC. Furthermore, this reporting requirement applies to all registered schemes as part of standard governance and is not contingent upon the use of specific investment techniques like securities lending or repurchase agreements.

**Takeaway:** Approved trustees must ensure that an annual internal control report is prepared and reviewed by an external auditor to confirm that the scheme’s management systems are effective and compliant with MPF regulations.

Correct: Under the regulations governing MPF contributions, when an employer utilizes direct credit (such as an electronic bank transfer) to settle mandatory contributions, the payment is legally recognized as having been made only on the date the funds are actually credited to the MPF scheme’s bank account. This requires employers to account for bank processing times to ensure the credit occurs on or before the contribution day.

**Incorrect:** For payments sent by post, the deemed payment date is the day the mail would normally be delivered, not the date of the postmark or the date it was mailed. In the case of direct debit for employers, the contribution is considered paid on the date the trustee receives the remittance statement, rather than the date the bank account is actually debited. For in-person deposits at bank branches, the payment is considered made on the date the cheque is deposited at the counter, provided there are sufficient funds for it to clear later.

**Takeaway:** The date a contribution is considered ‘paid’ varies by method: direct credit depends on the scheme’s account being credited, while postal payments depend on the expected delivery date and direct debits depend on the receipt of the remittance statement.

Correct: Under the Mandatory Provident Fund Schemes Ordinance, if a scheme chooses to appoint individual trustees instead of a corporate trustee, there must be a minimum of two such individuals. These trustees are required to provide financial security in the form of a performance guarantee (such as an insurance policy or bank guarantee) to cover potential losses resulting from a breach of duty. The statutory amount for this guarantee is 10% of the scheme’s net asset value, subject to a maximum cap of HK$10 million.

**Incorrect:** The requirement for a minimum of two trustees makes any suggestion of a single trustee incorrect. The financial requirement of HK$150 million in paid-up capital and net assets applies specifically to approved corporate trustees, not individuals. Furthermore, alternative guarantee percentages like 5% or 20%, or the absence of a maximum cap, do not align with the specific 10% and HK$10 million limit set by the MPFA.

**Takeaway:** Individual trustees must be at least two in number, ordinarily reside in Hong Kong, and provide a performance guarantee calculated as 10% of the scheme’s net asset value, capped at HK$10 million.

Correct: Statements I, II, and III are accurate reflections of the risks and regulatory requirements surrounding the transfer of MPF accrued benefits. Statement I correctly identifies the market fluctuation risk (out-of-market risk) during the transfer process, which can lead to a ‘sell low, buy high’ scenario. Statement II accurately states the general 30-day statutory timeframe for the original trustee to complete the transfer after notification. Statement III highlights a critical personal factor: members in guaranteed funds may forfeit their guaranteed returns if they transfer out before meeting specific conditions like a minimum investment period.

**Incorrect:** Statement IV is incorrect because it misattributes the duty of providing the ‘transfer statement’. According to MPF regulations, it is the original (transferor) trustee who must provide the transfer statement containing the member’s particulars and the amount transferred. The new (transferee) trustee is instead responsible for providing a ‘transfer confirmation’ (written notice) to the member once the benefits have been received.

**Takeaway:** When transferring MPF benefits, members must weigh investment risks and fund-specific terms, while being aware that the original trustee handles the transfer statement and the new trustee handles the transfer confirmation, typically within a 30-day processing window. Therefore, statements I, II and III are correct.

Correct: Statement I is correct because chauffeurs, bodyguards, and boatboys employed by individuals are generally covered by the MPF System as their services are not rendered within a residential premises. Statement IV is correct because drivers of taxis, public light buses, and vans who are not owners of the vehicles are typically classified as self-employed persons (or employees) and are required to participate in the MPF System.

**Incorrect:** Statement II is incorrect because domestic employees, such as helpers or gardeners, who perform their duties at the employer’s household (residential premises) are specifically exempt from MPF coverage. Statement III is incorrect because overseas employees entering Hong Kong under an employment visa with permission to stay for a period not exceeding 13 months are exempt from the MPF System for that initial period.

**Takeaway:** Determining MPF coverage requires evaluating the location of service for domestic staff, the duration of stay for expatriates, and the self-employment status of individuals in the transport and service sectors. Therefore, statements I and IV are correct.

Correct: According to the Mandatory Provident Fund legislation, the Statement of Investment Policy (SIP) is a mandatory document for each constituent fund and Approved Pooled Investment Fund (APIF). Its primary purpose is to ensure transparency for scheme members. The SIP must clearly disclose the investment objectives, the types of assets the fund may invest in, the asset allocation balance, the risk and expected return of the portfolio, the policy on financial futures and options, and whether the fund will engage in securities lending.

**Incorrect:** Disclosures regarding the specific names of individual brokers or the detailed breakdown of management fees are typically found in other sections of the offering document or the trustee’s report, rather than the SIP. Historical performance data and the biographies of fund managers are relevant for marketing and performance evaluation but are not statutory requirements for the Statement of Investment Policy. Administrative details such as the physical location of assets or the schedule for annual general meetings are operational matters that do not fall under the investment strategy framework.

**Takeaway:** The Statement of Investment Policy serves as a transparency tool that outlines the strategic boundaries of a fund, including its objectives, asset mix, risk-return profile, and the use of specialized instruments like derivatives or securities lending.

Correct: The Mandatory Provident Fund Schemes (Fees) Regulation is the specific statutory instrument that prescribes the types and amounts of fees imposed by the MPFA. This includes the fees payable for the registration of principal and subsidiary intermediaries, the approval of responsible officers, and the annual registration fees required to maintain their status. It also covers fees for the registration of schemes and the approval of trustees.

**Incorrect:** The Mandatory Provident Fund Schemes (General) Regulation focuses on the operational and administrative requirements of MPF schemes, such as investment standards and contribution processes, rather than the specific fee schedule. The Mandatory Provident Fund Schemes (Exemption) Regulation is strictly concerned with the requirements for ORSO schemes to be exempted from MPF requirements. The Guidelines on Reporting Requirements (Part II) provide instructions on the technical aspects of submitting data to the MPFA but do not establish the legal fee amounts.

**Takeaway:** All statutory fees related to the registration of intermediaries, the approval of trustees, and the ongoing administration of MPF schemes are governed by the Mandatory Provident Fund Schemes (Fees) Regulation.

Correct: Statements I, II, III, and IV are all correct. Under the interface arrangements, employers with an MPF exempted ORSO registered scheme must provide existing members (those employed before the MPF system’s launch) a one-time option to choose between staying in the ORSO scheme or joining an MPF scheme. A critical distinction is that existing members who stay in the ORSO scheme are not subject to Minimum MPF Benefits (MMB) rules. However, new eligible employees who join such a scheme are subject to MMB, which must be preserved until age 65 or other statutory grounds for withdrawal are met.

**Incorrect:** Any combination that excludes one of these statements is incorrect because they all represent fundamental regulatory requirements for MPF exempted ORSO schemes. It is a common misconception that MMB applies to all members of an exempted ORSO scheme; in reality, it specifically targets new members to ensure they have a level of protection comparable to the MPF system.

**Takeaway:** The MPF interface rules distinguish between ‘Existing Members’ and ‘New Members’ of MPF exempted ORSO schemes, primarily regarding the application and preservation of Minimum MPF Benefits (MMB). Therefore, all of the above statements are correct.

Correct: Statements I, II, III, and IV are all accurate reflections of the Mandatory Provident Fund Schemes Ordinance (MPFSO) regarding new non-casual employees. Statement I correctly identifies the ‘contribution holiday’ for employees, which exempts them from contributing for any wage period commencing on or before the 30th day of employment. Statement II correctly notes that employers, unlike employees, must contribute from the very first day of employment. Statement III accurately states the 60-day ‘permitted period’ for enrollment. Statement IV correctly identifies that the first set of contributions (covering the period from the start of employment for the employer and the end of the holiday for the employee) must be paid to the trustee on or before the 10th day of the month following the month in which the 60-day permitted period ends.

**Incorrect:** Options that omit any of these statements are incorrect because all four points are fundamental regulatory requirements for onboarding new members. A common misunderstanding is that the employer also enjoys a 30-day contribution holiday, or that the first contribution is due immediately after the 30th day, both of which are legally incorrect under the MPFSO.

**Takeaway:** For non-casual employees, while the enrollment deadline is 60 days, the employer’s liability begins on day one, whereas the employee’s liability begins after the 30-day contribution holiday; the first payment for both is synchronized to the 10th day of the month following the end of the 60-day permitted period. Therefore, I, II, III & IV is correct.

Correct: Statements I, II, and IV are correct. Under the Mandatory Provident Fund Schemes Ordinance, if a self-employed person (SEP) cannot provide evidence of income and the trustee is not satisfied with the reason, the relevant income is defaulted to the maximum level ($360,000 per year). If an SEP suffers a business loss, they may discontinue contributions by lodging a statement of loss with the trustee. Furthermore, if the most recent notice of assessment (NOA) is older than two years, the SEP must declare an amount equal to the previous year’s assessable profits.

**Incorrect:** Statement III is incorrect because the permitted period for a self-employed person to become a member of an MPF scheme is 60 days, not 30 days. This period allows the individual sufficient time to select a scheme and complete the enrollment process after commencing self-employment.

**Takeaway:** Self-employed persons must adhere to specific income assessment rules, including a 60-day enrollment window and the use of the most recent notice of assessment (within 2 years) to determine mandatory contributions. Therefore, statements I, II and IV are correct.

Correct: Under the Employee Choice Arrangement (ECA), a relevant employee is entitled to transfer the accrued benefits derived from their own mandatory contributions made during their current employment to an MPF scheme of their choice. This transfer can be performed once every calendar year, allowing employees greater flexibility and control over their investment strategy while still maintaining their current employment relationship. Only the employee’s portion of mandatory contributions and the related investment gains or losses are eligible for this specific type of transfer.

**Incorrect:** The suggestion that both employer and employee mandatory contributions from current employment can be transferred is inaccurate because the employer’s portion must remain in the scheme chosen by the employer until the employee leaves that job. This restriction exists partly to facilitate the offsetting of Long Service Payments or Severance Payments. Similarly, a transfer consisting only of the employer’s mandatory contributions is not permitted under the ECA. While voluntary contributions are portable, their transferability depends on the specific governing rules of the individual MPF scheme rather than the statutory rights provided under the ECA for mandatory portions.

**Takeaway:** The Employee Choice Arrangement (ECA) specifically grants employees the right to move their own mandatory contributions from their current employment account to a different scheme once per year, while the employer’s mandatory contributions from the current job must stay put.

Correct: The Mandatory Provident Fund Schemes Authority (MPFA) is equipped with a broad range of supervisory and enforcement powers to ensure trustees adhere to statutory requirements. These powers include the ability to order remedial actions, conduct formal investigations, and impose financial penalties proportionate to the breach. In more severe instances, the MPFA can suspend a trustee and appoint a temporary replacement, or even revoke the trustee’s approval and pursue criminal prosecution. Under the legislation, a conviction can lead to a maximum fine of $200,000 and imprisonment for up to 2 years. Therefore, all the listed actions and penalties are within the legal framework. (i), (ii), (iii) and (iv) Incorrect: Options that exclude the MPFA’s power to intervene in the administration of a scheme or those that overlook the criminal sanctions are incomplete. The regulatory regime is designed to be comprehensive, providing for both administrative corrections and severe punitive measures like imprisonment and revocation of approval to protect scheme members’ interests. Restricting the scope to only investigations or only financial penalties does not reflect the full authority granted to the MPFA.

**Takeaway:** The MPFA maintains a tiered enforcement strategy for approved trustees, ranging from remedial directives and financial penalties to the suspension of duties, revocation of status, and criminal prosecution involving significant fines and imprisonment.

Correct: The Securities and Futures Commission (SFC) is specifically responsible for authorizing MPF schemes and their constituent funds. This regulatory role involves vetting the disclosure of information in offering documents and ensuring that all marketing materials related to MPF products comply with transparency and investor protection standards before they are distributed to the public.

**Incorrect:** The Mandatory Provident Fund Schemes Authority (MPFA) serves as the primary administrator and registrar of the MPF system, focusing on overall scheme registration and legislative reform rather than the specific vetting of investment product marketing materials. The Insurance Authority (IA) focuses on the financial stability of insurance companies and the supervision of intermediaries whose core business is insurance. The Monetary Authority (MA) regulates authorized institutions like banks to ensure their financial soundness and supervises intermediaries within the banking sector.

**Takeaway:** Under the regulatory framework of the MPF system, the SFC maintains the specific mandate of authorizing investment products and vetting the accuracy and fairness of their promotional and disclosure documents.

Correct: In the event of a breach of trust, such as violating investment restrictions stipulated in the trust deed, the trustee is held liable for any resulting loss or reduction in scheme assets. The principle of restoration requires the defaulting trustee to restore the property or pay sufficient compensation at their own expense. A key regulatory requirement is that the trustee cannot use the assets of the MPF scheme to indemnify itself against liabilities arising from its own mistakes or breaches of duty.

**Incorrect:** It is incorrect to suggest that a trustee can offset losses against future scheme returns or use scheme assets to cover their own liability, as this would violate the fiduciary duty to act solely in the interest of the beneficiaries. Liability for a breach of trust is not contingent upon proving ‘bad faith’ or ‘malice’; failing to perform duties as required or exceeding authorized powers constitutes a breach regardless of intent. While the MPFA maintains a Compensation Fund, it is a secondary safety net for specific cases like theft or embezzlement, and does not absolve a trustee from their primary legal obligation to restore assets lost through a breach of trust.

**Takeaway:** MPF trustees have a fiduciary duty to manage assets strictly according to the trust deed and law; if a breach occurs, they must personally bear the cost of restoring the scheme to its original position.

Correct: Statements I, II, and III are accurate reflections of the MPF regulatory framework. Mandatory contributions are subject to statutory requirements, meaning they vest immediately and must be preserved until the member reaches the age of 65 (subject to specific exceptions). In contrast, voluntary contributions offer more flexibility, as their vesting, preservation, portability, and withdrawal terms are dictated by the governing rules of the specific MPF scheme. Despite these differences in rules, both mandatory and voluntary contribution assets are managed by the same approved trustees and are protected by the same indemnity insurance.

**Incorrect:** Statement IV is incorrect because the minimum relevant income level (currently $7,100 per month) only applies to the employee’s obligation to contribute. Even if an employee earns less than the minimum relevant income level, the employer is still legally required to make mandatory contributions equal to 5% of the employee’s relevant income. The employer is only exempt if the employee has been employed for less than 60 days (subject to the 60-day rule) or falls into an exempt category.

**Takeaway:** While the administrative and trust management of mandatory and voluntary contributions are identical, the statutory controls over vesting and withdrawal apply strictly to mandatory contributions, whereas voluntary contributions are primarily governed by individual scheme rules. Therefore, statements I, II and III are correct.

Correct: Registered intermediaries are strictly prohibited from accepting cash payments from clients under the MPF conduct requirements. Any payments for contributions must be made via crossed cheques payable only to the approved trustee or the registered scheme itself. Additionally, intermediaries must disclose any material interests, such as monetary or non-monetary benefits (commissions), that could give rise to a conflict of interest, ensuring the client is treated fairly throughout the process.

**Incorrect:** Accepting cash is a direct violation of the MPF Guidelines, regardless of whether a receipt is issued or how quickly the funds are forwarded. Cheques must never be made payable to the intermediary or the principal intermediary’s firm; they must be made out to the trustee or the scheme. Furthermore, documenting the rationale for regulated advice is a mandatory requirement that cannot be bypassed, and records must be retained for a minimum of seven years, not five.

**Takeaway:** To maintain professional conduct, intermediaries must refuse cash, ensure cheques are correctly payable to the trustee, disclose all potential conflicts of interest, and maintain comprehensive records of their advice for at least seven years.

Correct: Statement II is correct because the Guidelines specify that if a client cannot be contacted after several attempts, the principal intermediary should send a document to the client to confirm that the intermediary has provided the offering document, explained key features, and recorded the client’s decision. Statement III is correct as the minimum retention period for audio records or written documentation related to post-sale calls is seven years. Statement IV is correct because a suitability assessment must be conducted when a registered intermediary gives regulated advice to a specific client (such as a personal account holder) that involves the choice of a particular constituent fund.

**Incorrect:** Statement I is incorrect because the Guidelines explicitly state that the processing of a client’s instruction does not need to wait for the completion of the post-sale call process. The requirement for suitability assessment mentioned in Statement IV is specifically for individual/specific interactions, whereas it is generally not required in group settings like seminars where advice is not directed to a specific person.

**Takeaway:** MPF intermediaries must adhere to strict conduct requirements including a seven-year record retention period and performing suitability assessments for specific client advice, while ensuring that administrative processes like post-sale calls do not unnecessarily delay the execution of client instructions. Therefore, statements II, III and IV are correct.

Correct: Statements I, III, and IV accurately reflect the statutory process for handling training deficiencies under the Mandatory Provident Fund Schemes Ordinance (MPFSO). The MPFA initiates the process with a written notice providing at least 30 days for completion. If this notice is ignored, the MPFA has the power to suspend the intermediary’s registration. If the individual remains non-compliant for a further 30 days after the suspension begins, the MPFA may then revoke their registration.

**Incorrect:** Statement II is incorrect because while Frontline Regulators (FRs) such as the HKMA, SFC, or IA are responsible for the supervision and investigation of intermediaries, the MPFA remains the sole authority empowered to impose disciplinary sanctions, including the suspension or revocation of registration.

**Takeaway:** The MPFA maintains exclusive disciplinary authority over subsidiary intermediaries regarding performance requirements; the enforcement process for training non-compliance follows a structured sequence of notice, suspension, and potential revocation. Therefore, statements I, III and IV are correct.

Correct: Under the Mandatory Provident Fund Schemes Ordinance (MPFSO), if a person provides false or misleading information in purported compliance with an investigation requirement with the specific intent to defraud, the maximum penalty upon conviction on indictment is a fine of $1,000,000 and imprisonment for 7 years. This high level of punishment reflects the gravity of attempting to deceive the regulator through fraudulent means during an official inquiry.

**Incorrect:** A fine of $1,000,000 and 2 years’ imprisonment is the maximum penalty for providing false or misleading information when the person acts knowingly or recklessly, but without the specific intent to defraud. A fine of $200,000 and 1 year’s imprisonment applies to cases where a person fails to comply with an investigation requirement without a reasonable excuse. A pecuniary penalty of $10,000,000 is a civil disciplinary order that the MPFA may impose, rather than a criminal sentence handed down by a court for fraud-related offences during an investigation.

**Takeaway:** The presence of an ‘intent to defraud’ when providing false information to the MPFA during an investigation increases the maximum potential imprisonment term from 2 years to 7 years on conviction on indictment.

Correct: According to the MPFA Guidelines on Conduct, registered intermediaries are strictly prohibited from accepting cash payments from clients for any MPF-related transactions. When a client provides a cheque for a contribution or payment, the intermediary has a duty to ensure that the cheque is crossed and made payable specifically to the approved trustee of the registered scheme or the scheme itself. This requirement is a fundamental safeguard to prevent the misappropriation of client funds and ensure that assets are handled with proper accountability.

**Incorrect:** Accepting cash is a direct violation of the conduct requirements, even if the intermediary intends to deposit it into a firm’s client account or convert it into a bank draft. Furthermore, cheques should never be made payable to the principal intermediary (the brokerage or bank) or the MPFA (the regulator), as these entities do not hold the scheme assets. Uncrossed cheques are also prohibited because they lack the security features required to ensure the payment is processed only through the banking system to the intended payee.

**Takeaway:** To ensure the security of client assets, MPF intermediaries must refuse all cash payments and verify that any cheques received are crossed and made payable only to the approved trustee or the registered scheme.

Correct: Statements I, II, and IV are explicitly required under the Mandatory Provident Fund Schemes legislation to be included in the Statement of Investment Policy (SIP). The SIP must provide transparency regarding the fund’s investment objectives, the expected return of the overall portfolio, the risk level of the investment strategy, and the specific policies regarding the use of financial futures and option contracts.

**Incorrect:** Statement III is incorrect because the SIP is intended to outline the broad investment parameters, such as the “kinds” of securities and the “balance/proportion” between different asset classes and markets. It does not require the disclosure of specific individual security names or a “top 10” list, as these holdings fluctuate with market conditions and are typically found in periodic fund fact sheets rather than the foundational investment policy document.

**Takeaway:** To ensure members are well-informed, every constituent fund and Approved Pooled Investment Fund (APIF) must maintain a Statement of Investment Policy that covers objectives, asset types, risk/return profiles, and policies on derivatives and securities lending. Therefore, statements I, II and IV are correct.

Correct: Under the Mandatory Provident Fund (MPF) System, the construction and catering industries are specifically designated for Industry Schemes to handle high labor mobility. A casual employee is defined as a person employed in one of these two industries on a day-to-day basis or for a fixed period of less than 60 days. Since interior fitting-out is one of the eight major categories identified within the construction industry, a worker hired for a 10-day project is legally classified as a casual employee and is covered by the MPF System from the first day of employment.

**Incorrect:** While employees in most other industries are exempt from MPF requirements if their employment lasts fewer than 60 days, this exemption does not apply to casual employees in the construction and catering sectors. Interior fitting-out is explicitly listed as a covered activity under the construction industry regulations, so the worker is not exempt. Additionally, the MPF System maintains a clear distinction between regular and casual employees in these sectors to allow for the specific administrative features of Industry Schemes, such as simplified enrollment and contribution processes.

**Takeaway:** In the designated catering and construction industries, workers hired on a day-to-day basis or for a fixed period of less than 60 days are classified as casual employees and are covered by the MPF System regardless of the short duration of their employment.

Correct: Under the Mandatory Provident Fund (MPF) legislation, voluntary contributions are integrated into the same rigorous safety and management framework as mandatory contributions. This ensures that assets derived from voluntary contributions are managed by the same approved trustees, qualified investment managers, and custodians, and are protected by indemnity insurance. However, the legislation specifically allows the governing rules of the individual MPF scheme to dictate the terms for vesting, preservation, portability, and withdrawal, rather than applying the standard statutory restrictions that govern mandatory contributions.

**Incorrect:** It is incorrect to suggest that voluntary contributions are exempt from the core safety requirements of the MPF Ordinance, such as the use of approved trustees or indemnity insurance, as these protections apply to all scheme assets. Furthermore, it is a misconception that voluntary contributions must follow the same statutory preservation rules as mandatory contributions; the law explicitly leaves the conditions for withdrawing voluntary benefits to the discretion of the specific scheme’s governing rules.

**Takeaway:** While voluntary contributions share the same institutional safeguards and management requirements as mandatory contributions, the specific rules regarding when a member can access or transfer those benefits are determined by the individual scheme’s governing rules.

Correct: For employers choosing to settle mandatory contributions via direct credit, the Mandatory Provident Fund Schemes Ordinance specifies that the contribution is officially considered paid only on the date the funds are actually credited to the MPF scheme’s bank account. This requires the employer to account for bank processing times to ensure the money arrives by the contribution deadline.

**Incorrect:** The date the employer initiates the transfer or issues the instruction to their own bank does not constitute payment, as the funds have not yet reached the trustee’s scheme account. The date the remittance statement is received is used to determine the payment date for other methods, such as direct debit or the use of employer reserves, but it does not apply to direct credit. Furthermore, there is no regulatory provision that deems payment complete based on a fixed number of days after the employer’s account is debited.

**Takeaway:** When using direct credit, the compliance obligation is met only when the scheme’s account is credited; employers must therefore initiate transfers early enough to avoid late payment surcharges.

Correct: According to the Mandatory Provident Fund Schemes Ordinance, if a scheme chooses to appoint natural persons as individual trustees rather than a corporate entity, there must be a minimum of two such individuals. These trustees are required to provide a performance guarantee, which can take the form of an insurance policy or a bank guarantee, to cover potential losses resulting from a failure to perform their duties. The statutory requirement for this guarantee is 10% of the scheme’s net asset value, subject to a maximum cap of HK$10 million.

**Incorrect:** Appointing only a single individual trustee is not permitted under the regulations, as the law requires at least two. The requirement for a minimum paid-up share capital of HK$150 million is a criterion specifically for approved corporate trustees, not for individuals. Furthermore, alternative percentages such as 5% or 20%, or different financial caps like HK$20 million, do not reflect the specific regulatory thresholds established for individual trustee performance guarantees.

**Takeaway:** To ensure the security of scheme assets when natural persons act as trustees, the MPF system mandates a minimum of two individual trustees and a specific performance guarantee linked to the scheme’s net asset value, capped at HK$10 million.

Correct: Statements II, III, and IV accurately reflect the regulatory requirements for MPF contribution payments. For employers utilizing direct debit, the contribution is legally considered paid on the date the trustee receives the remittance statement. In the case of direct credit, the payment is only recognized once the funds are actually credited to the MPF scheme’s bank account. Furthermore, for self-employed persons (SEPs) who pay via direct debit and are not required to submit a remittance statement, the payment date is defined as the day the trustee issues the direct debit instruction.

**Incorrect:** Statement I is incorrect because the Mandatory Provident Fund Schemes Ordinance (MPFSO) stipulates that for payments sent by post, the contribution is considered paid on the date the cheque would normally be delivered by the postal service, rather than the date of bank clearance. While the employer must ensure sufficient funds are available for clearance to avoid a bounced cheque (which would invalidate the payment), the deemed payment date is tied to the postal delivery timeline.

**Takeaway:** Understanding the specific ‘deemed’ payment dates for different settlement methods is crucial for compliance; for instance, postal payments rely on expected delivery dates, whereas direct credit relies on the actual receipt of funds in the scheme’s account. Therefore, statements II, III and IV are correct.