MPF levy mechanism proposed

May 09, 2012

A proposal to form a mechanism for the automatic suspension and resumption of the levy for the Mandatory Provident Fund Schemes Compensation Fund will be tabled at the Legislative Council on May 30.
 
The Financial Services & The Treasury Bureau said the proposal is set out in the Mandatory Provident Fund Schemes (General) (Amendment) Regulation 2012 (Amendment Regulation).
 
Under the proposal, the levy will be automatically suspended when the fund's reserve exceeds $1.4 billion and the levy will be resumed when the reserve drops below $1 billion. The levy can be suspended from the third quarter if the proposal is approved within the current legislative session.
 
The move will benefit MPF scheme members by reducing scheme expenses. More of their MPF contributions will go towards their retirement protection.
 
The Compensation Fund was set up in 1999 to compensate scheme members for losses caused by misfeasance or illegal conduct committed by the trustees or others concerned with the administration of those MPF schemes.
 
The Mandatory Provident Fund Scheme Authority has been collecting an annual levy at the rate of 0.03% of the net asset value of MPF assets for the Compensation Fund since 2000. The balance of the Compensation Fund currently stands at $1.6 billion.