An Overview of Occupational Retirement Scheme Framework (ORSO)
The Occupational Retirement Schemes Ordinance (ORSO) came into effect on 15 October 1993. ORSO aims to ensure all voluntarily established occupational retirement schemes operating in, or from Hong Kong are properly administered and funded, hence offering greater security for employees.
Mandatory Provident Fund Schemes Authority
Effective 10 January 2000, the Mandatory Provident Fund Schemes Authority (MPFA) assumed the role of the Registrar of Occupational Retirement Schemes. Responsibilities of the MPFA include:
- Ensure all occupational retirement schemes are registered under ORSO;
- Monitor the operation of all registered schemes through an annual reporting process;
- Grant exemption to qualified ORSO schemes from MPF system; and
- Monitor MPF-exempted ORSO schemes under the Mandatory Provident Fund Schemes (Exemption) Regulation.
Coverage and Exemption
Employers operating occupational retirement schemes are required to apply to the MPFA for registration or exemption of their schemes. Schemes exempted from ORSO could include:
- Offshore schemes which have been registered or approved by a recognised overseas authority; or Schemes with not more than either 10%, or 50 members, being holders of a Hong Kong permanent identity card, whichever is less.
- Direct payment of benefits to scheme members
- Provisions prohibiting the alteration of the scheme rules to a member's detriment of his/her accrued rights or vested benefits unless not less than 90% of scheme members have consented to the alteration
- the member’s benefits accrued under the period when the exemption certificate applied to the scheme which for the purpose means the years of post-MPF service; and
- 1.2 x final average monthly relevant income (a maximum of HK$20,000 per month on or before 31 May 2012, HK$25,000 per month from 1 June 2012 to 31 May 2014 or HK$30,000 per month on or after 1 June 2014) x years of post-MPF service
An occupational retirement scheme must meet the stipulated criteria in ORSO in order to be registered. These include:
In addition, a scheme registered under the ORSO framework must comply with the basic requirements in order to remain registered, including, but not limited to the separation and proper use of scheme assets, the scheme's adequate funding, regular audits and the submissions of annual returns.
Mandatory Provident Fund Schemes (Exemption) Regulation
The Mandatory Provident Fund Schemes (Exemption) Regulation (the Regulation) sets out in details the interface arrangements of Occupational Retirement Schemes (ORSO schemes) and Mandatory Provident Fund schemes (MPF schemes). It specifies the conditions for the exemption of the existing ORSO schemes, which have to be established on or before 15 October 1995, and applied for registration no later than 15 January 1996.
The interface arrangements stipulated in the Regulation allow existing members who became members of an MPF-exempted ORSO scheme on or before 1 December 2000 and new eligible employees the right to choose the MPF-exempted ORSO scheme or an MPF scheme.Employers and existing members of the MPF-exempted ORSO schemes are not required to fulfil a number of MPF requirements such as the preservation, portability and withdrawal of accrued benefits. However, new members' accrued benefits from MPF-exempted ORSO schemes are subject to the preservation, portability and withdrawal requirements of the MPF regulations, up to an amount equivalent to the 'minimum MPF benefits'.
The “Minimum MPF Benefits” means the lesser of: