Which MPF scheme should I CHOOSE?

Which MPF scheme should I CHOOSE?

Choose MPF scheme with care; study fees, services and fund options Currently, you have to choose an MPF scheme under five situations: You are an employer You are a self-employed person When your employer has enrolled in two or more schemes When you want to make special voluntary contributions When you cease to be employed and want another trustee to look after your MPF assets accumulated in your former employment When choosing a scheme, you should consider: Range and quality of services of trustees and their service providers Choices and suitability of funds (past performance is not a guide to the future performance of an MPF fund) Fees and charges (always compare funds of the same type)

36 Our Business Operations Protecting the Interests of Scheme Members OVERVIEW Our role Ensure that employers, employees and self-employed persons covered by the MPF System comply with MPF requirements In 2010 11, we Recovered $197.4 million in default MPF contributions through the courts, or by persuasion and counselling of the employers concerned Filed 716 claims at the Small Claims Tribunal, District Court and High Court on behalf of 5 574 employees Applied for 2 589 summonses in respect of default contributions and non-enrolment Submitted 306 claims via liquidators on behalf of 5 708 employees Issued 50 financial penalty notices to 48 employers Increased the visibility of MPFA s law enforcement actions through an enhanced section on enforcement work on MPFA s website and an episode produced for the Police Magazine broadcast on television Stepped up enforcement against scheme members who make false statements to withdraw their accrued benefits on the grounds of permanent departure from Hong Kong As at 31 March 2011 Close to 100%, 98% and 77% respectively of employers, employees and self-employed persons were enrolled in MPF schemes 85% of the working population in Hong Kong have been covered under various retirement protection schemes The MPFA s primary mission is to protect the rights and interests of MPF scheme members. Through our continual enforcement efforts to combat employers non-compliance, we hope to remind employers of their MPF obligations under the MPF legislation and encourage employees to pay attention to their MPF rights.

Mandatory Provident Fund Schemes Authority Annual Report 2010 11 37 ENROLMENT 85% of the working population in Hong Kong have been covered under various retirement protection schemes, including MPF schemes, MPF-exempted ORSO schemes or statutory pension plans (such as the Civil Service Pension Scheme). The remaining 15% included 12% who were exempt from the MPF System (employed persons aged below 18 or above 65, domestic employees and self-employed hawkers, etc), and 3% who should have joined an MPF scheme but have yet to do so. Participation rates in the MPF System remained high throughout the year. As at 31 March 2011, about 246 300 employers, 2 271 700 employees and 241 100 self-employed persons ( SEPs ) have joined the MPF System, representing respective enrolment rates of close to 100%, 98% and 77%. For the Industry Schemes set up for casual employees in the catering and construction industries, the members enrolled were 17 800 employers, 377 400 employees and 18 600 SEPs. Detailed statistics on enrolment are included in Part A of the Statistics section of this report. ENQUIRIES AND COMPLAINTS In 2010 11, 116 403 enquiries were received by the MPFA. They were mostly about transfer or withdrawal of benefits, contribution arrangements, and enrolment arrangements. During the year, 4 992 complaints were received as compared with 7 124 in 2009 10. Complaints relating to default contributions accounted for the majority of the cases recorded, followed by those relating to non-enrolment. Statistics relating to enquiries and complaints are in Part E of the Statistics section. DETERRENT TO NON-COMPLIANCE Most employers are law-abiding. Unfortunately, there are still some who seek to evade their MPF obligations by not enrolling their employees in any MPF scheme or not making mandatory contributions for them. We reviewed our strategies and measures in the light of operational experience and continued to step up enforcement of the MPF legislation against non-compliance to protect the retirement interests of scheme members. While effective strategies and measures were maintained, some new strategies were implemented to achieve a greater deterrent effect and to enhance efficiency of operations.

38 Our Business Operations Protecting the Interests of Scheme Members (cont d) We notice that non-compliance is sometimes due to misunderstanding and/or unawareness of MPF requirements. While we strive to enforce the MPF legislation, we also help employers understand their MPF obligations. The section on enforcement work on our website has been significantly revamped and redesigned to include new information, including significant enforcement cases and common fallacies with a view to enhancing deterrent effect and promoting understanding of MPF legislation. Separately, we completed the development of a database to capture information on employers and officers who have noncompliance records. On the basis of the information, we have compiled a list of these employers and officers for publication on our website starting from 23 May 2011. The section on enforcement work on MPFA s website was revamped to include new information, including significant enforcement cases and common fallacies, to enhance deterrent effect and to promote understanding of MPF legislation

Mandatory Provident Fund Schemes Authority Annual Report 2010 11 39 To augment the deterrent effect against non-compliant employers, we are preparing legislative proposals to make failure of employers to rectify non-payment of mandatory contributions a continuous offence; and to create an offence against failure of employers to pay any sum awarded by a tribunal or court. The latter proposal is similar to the arrangement introduced under the Employment (Amendment) Ordinance 2010. Debt Recovery Actions All along, we have been striving to recover defaulted MPF contributions for employees. While employees have the right to complain about suspected non-compliance of employers, trustees are statutorily responsible for reporting defaulted cases to us. When a case is substantiated, we will persuade the employers concerned to honour their obligations and, where appropriate, initiate civil claims and criminal prosecutions against them. In accordance with the MPF legislation, a surcharge calculated at 5% of the default contribution amount is imposed on employers who fail to make MPF contributions for their employees. The surcharges received are credited into the employees MPF accounts. During the year, 247 600 surcharge notices were issued to employers with defaulted cases reported by trustees. In 2010 11, we completed investigations into about 28 000 employers regarding contributions and surcharges in arrears. On the substantiated cases, we filed one claim with the High Court, 100 claims with the District Court and 615 claims with the Small Claims Tribunal on behalf of 758, 2 236 and 2 580 employees respectively. In addition, we made 306 applications for 5 708 employees to liquidators in respect of default contribution cases. Where sufficient evidence is available, we refer non-compliant cases to the Department of Justice and the Police for criminal prosecution. We applied for 2 430 and 159 summonses in respect of default contribution and non-enrolment cases respectively. All the 141 employers (involving 1 610 summonses) who had taken plea by 31 March 2011 pleaded guilty or were convicted. The total amount of fines imposed was $5,042,500. Among the summonses issued, 556 were laid against 48 directors/managers of limited companies. 29 of these directors/managers were convicted and fined between $2,000 and $90,000 each. The rest were pending court judgment. In addition, three summonses were laid against two MPF intermediaries for giving false and misleading information to the MPFA. One of the MPF intermediaries was convicted and fined $10,000. The other was pending court judgement. We also applied for 10 court orders to compel convicted employers to rectify their MPF non-compliance in order to protect the interests of scheme members.

40 Our Business Operations Protecting the Interests of Scheme Members (cont d) During the year, we issued one statutory demand to an employer, who was a repeat offender, requesting it to settle outstanding MPF contributions and surcharges within 21 days, failing which we would file a windingup/bankruptcy petition with the High Court. As this employer was subsequently wound up by a third party, we made an application to the liquidator in respect of the default contribution case. The case is being investigated by the liquidator. The MPFA is empowered under the MPF legislation to impose financial penalties on defaulting employers. During the year, 49 financial penalties of $5,000 for each case or 10% of the outstanding contribution, whichever was the greater, were imposed on 47 employers for default offences. They were mainly repeat defaulters. In addition, one financial penalty of $10,000 was imposed on an employer who failed to provide remittance statements to its trustee. We conducted proactive inspections into 2 420 employment establishments to check on non-enrolment and default contributions. Major targets of these inspections included catering establishments, retail outlets and construction sites. To enhance the efficiency of our enforcement efforts, we maintained close communication and exchange intelligence with relevant stakeholders. Proactive inspections, for instance, were held jointly with the Labour Department. These collaborative efforts aimed to strengthen deterrence against noncompliant employers. We maintained close contact with labour unions to monitor and keep abreast of the situations of specific industries, especially those which tended to have more non-compliant cases, including the catering, retail, cleaning, security and construction industries. In 2010 11, we recovered $197.4 million in default MPF contributions. Statistics on enforcement action taken are set out in Part F of the Statistics section. Enforcement Actions Against Target Groups We continued to take measures to enhance the compliance of SEPs. By distributing leaflets to SEP groups, we reminded them of their MPF obligations and encouraged them to actively look after their MPF investments. We conducted proactive inspections against suspected non-compliant SEPs and made outbound calls to selected SEPs to check on their compliance with MPF requirements and followed up any non-compliant instances identified.

Mandatory Provident Fund Schemes Authority Annual Report 2010 11 41 Under the MPF legislation, the benefits accrued in an MPF scheme member s account are to be preserved until retirement. Permanent departure from Hong Kong is one of the circumstances under which a scheme member may withdraw his accrued benefits before attaining retirement age. In recent years, some scheme members made false statements to withdraw accrued benefits on such grounds, and we have been taking actions to deter such abuses. In collaboration with the Police Public Relations Branch, an episode on a permanent departure case was produced for the Police Magazine and broadcast on local television channels. The aim was to warn scheme members against making false statements to withdraw accrued benefits on such grounds. Meanwhile, we continued to liaise with the relevant Government departments to vet the permanent departure claims and investigated suspected cases of abuse. During the year, we prosecuted 79 scheme members for making false statements in this regard. 46 of the scheme members pleaded guilty and were fined between $3,000 and $18,000 each. The other cases were pending court judgement as at 31 March 2011.