At the end of March the reserve of the Mandatory Provident Fund Scheme Compensation Fund amounted to $850 million. Secretary for Financial Services & the Treasury Frederick Ma says the Government has started to review the fund's reserve level and levy rate.

Mr Ma told lawmakers today the amount of voluntary contributions has been stable since the implementation of the Mandatory Provident Fund System. The relevant annual amount is slightly more than $2 billion, accounting for about 9% of the annual total contributions of $24 billion.

Although a number of trustees launched "special voluntary contribution" schemes in 2004, total voluntary contributions over the past year have not increased significantly.

Review intended

Special voluntary contributions, which are directly made to trustees without involving employers, are covered by the MPFS Compensation Fund. A sum of $600 million was allocated as its seed money when the fund was established in 1998.

"At that time, we intended to review the reserve level and levy rate in light of the total amount of accrued benefits and other prevailing factors once the reserve reached $900 million," Mr Ma said.

The annual levy rate of the fund is 0.03% of the net asset value of the scheme assets. At the end of March, the reserve of the fund amounted to $850 million.

"Together with the MPFA, we have already commenced the work to review the reserve level and levy rate of the compensation fund."