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Information Centre

ORSO Employer

1
As an employer, if I operate a retirement scheme, am I required to apply for a certificate of exemption or registration under the Occupational Retirement Schemes Ordinance ("ORSO")?

Employers who operate retirement schemes that fall under the ambit of ORSO and meet its definition of an "occupational retirement scheme" are required to apply to MPFA for registration or exemption of their schemes.
The ORSO applies to all schemes operated in and from Hong Kong. Offshore schemes (i.e. schemes whose domicile is outside Hong Kong and whose trust is governed by foreign laws) providing benefits to members employed in Hong Kong are also covered.
For details, please refer to Occupational Retirement Schemes Ordinance (Chapter 426, Laws of Hong Kong).

2
For an ORSO scheme that has been granted an MPF exemption certificate, what is the relevant governing legislation, in addition to the Occupational Retirement Schemes Ordinance ("ORSO")?

In addition to ORSO, MPF exempted ORSO schemes are governed by the Mandatory Provident Fund Schemes (Exemption) Regulation, which sets out in detail the arrangements for the interface between ORSO and MPF schemes, and specifies the circumstances for the exemption of ORSO schemes from the MPF requirements. It also stipulates, for ORSO schemes that have successfully applied for MPF exemption, the mandatory conditions employers of the relevant ORSO schemes are subject to, as well as the provisions applicable to the ORSO schemes' trustees, directors of the trustees, and appointed persons managing the investment of the assets.
For details, please refer to the Mandatory Provident Fund Schemes (Exemption) Regulation (Chapter 485B, Laws of Hong Kong).

3
What if I want to provide the same ORSO scheme benefits to members who are no longer eligible to remain in the original MPF exempted ORSO scheme, due to scheme or company restructuring?
An employer who spins off a new scheme from a relevant ORSO registered scheme may apply for MPF exemption under section 16 of the Mandatory Provident Fund Schemes (Exemption) Regulation. The MPFA considers the following when exercising its power to issue an exemption certificate:
  • whether the scheme is a new scheme established as a result of scheme restructuring or bona fide business transactions (including company amalgamation, restructuring and joint ventures);
  • whether the members of the original scheme were exempt from the MPF legislation;
  • whether the terms and conditions of the scheme are generally as favorable as the original scheme; and
  • whether a substantial portion of the members of the scheme comprise members of the original scheme.

To obtain a copy of the application form and the relevant guidelines, please refer to Application for MPF Exemption Certificate for a scheme established as a result of scheme restructuring or bona fide business transactions.

4
If I plan to change my MPF exempted ORSO registered scheme from a defined benefit scheme to a defined contribution scheme, will this affect the status of MPF exemption?
No. In general, a change of benefit type will not affect the MPF exemption status of the ORSO scheme if the change only involves an amendment to the scheme rules.
If you believe that the change of benefit type may affect scheme members’ interests, you may offer the affected scheme members the choice of joining an MPF scheme or remaining in the MPF exempted ORSO registered scheme.
It should be noted that any amendment to the terms of the scheme that would result in an alteration, to the member’s detriment, to either his accrued rights under the scheme or his vested benefits must be consented to by not less than 90% of the members of the scheme.
5
What are the requirements when reporting the ORSO scheme changes made by a relevant employer?

The following specified forms are used to report scheme changes by a relevant employer (or the representative employer in a group scheme consisting of more than one employer). The employer is obliged to notify MPFA within one month of certain changes, details of which are as follows:

Type of changeSpecified form
Change of scheme nameORS-5
Change of relevant employer of the scheme by way of replacementORS-6
Change (joining or withdrawal) of relevant employer of the scheme where no replacement is involvedORS-7
Change of name and/or address of the relevant employer or representative employer of a scheme not caused by change of its legal entityORS-8
Change of administrator of an ORSO registered scheme **ORS-9
Change of representative employer of a group schemeORS-11

For details, please refer to Change of Scheme Particulars
** With regard to an MPF exempted ORSO scheme, please note that prior approval by MPFA is required for the appointment or retirement of an individual trustee and/or corporate trustee that is not registered as a trust company. Please refer to Question #6.

6
What changes to an ORSO scheme require prior approval of MPFA?
In the case of an MPF exempted ORSO registered scheme, prior approval from MPFA is required for:
  • the appointment or retirement of an individual trustee;
  • the appointment or retirement of a corporate trustee which is not a registered trust company incorporated in Hong Kong; and
  • the appointment or retirement of a director of a trustee of the scheme being neither a registered trust company nor an overseas company comparable to a registered trust company.

To obtain the relevant guidelines, please refer to Application for Approval of Appointment/Retirement of Trustee.

 

7
What are the requirements regarding the annual reporting of an ORSO registered scheme for an employer? What should the relevant employer do if they are unable to meet the submission deadline?

The relevant employer is required to submit the employer’s auditor’s statement (i.e. Form A & B) to the administrator’s auditor not later than four months after each of the scheme’s financial years.
Relevant employers unable to meet the deadline, should apply in writing to MPFA in advance of the due date. Applications for extension of time will only be granted in exceptional circumstances due to justifiable and unforeseeable reasons.
For further details, please refer to Documents to be Provided Annually.

8
Is there any annual reporting requirement for an ORSO exempted scheme?
Yes. The relevant employer is required to provide the specified information annually to MPFA, within 14 days after each anniversary of the date of the exemption certificate. The type of information to be provided is determined by the grounds on which the ORSO exemption certificate is issued.
The MPFA issues an exemption certificate to a relevant employer on either one of the following grounds:
  • the scheme is registered or approved by an overseas authority which performs functions generally analogous to those of MPFA; or
  • not more than either 10% or 50 of that scheme’s members, whichever is less, are Hong Kong permanent identity card holders.

If the ORSO scheme is approved on the basis of it being registered or approved by an overseas authority, the employer must provide MPFA satisfactory documentary evidence of the continued validity of the relevant registration or approval of the scheme.
For schemes approved on the basis of the number of permanent identity card holders, the employer is required to provide a written statement specifying the number of members of the scheme and the number of scheme members who are Hong Kong permanent identity card holders.
For more details, please refer to Documents to be Provided Annually.

9
What are minimum MPF benefits ("MMB")?
The Mandatory Provident Fund Schemes (Exemption) Regulation ("the Exemption Regulation") stipulates that accrued benefits in respect of a member who joined an ORSO scheme after the launch of the MPF System on 1 December 2000 (i.e. a new member as defined under the Exemption Regulation) are subject to the preservation, portability and withdrawal requirements up to an amount equivalent to the MMB.
In relation to a member of a relevant scheme, MMB means the lesser of (a) the member’s benefits accrued and held under the scheme during the period when the exemption certificate applied to the scheme which for this purpose means the years of post-MPF service; and
(b) 1.2 x final average monthly relevant income x years of post-MPF service.
Existing members of MPF exempted ORSO registered schemes (i.e. employees who joined an ORSO scheme on or before 1 December 2000) are exempt from the preservation, portability and withdrawal requirements of the provisions under the Exemption Regulation. Like a new member, however, an existing member’s MMB cannot be forfeited upon dismissal for cause.
For details, please refer to Preservation and Withdrawal Requirements of Minimum MPF Benefits.
10
In calculating the minimum MPF benefits (“MMB”) of a new member of an MPF exempted ORSO registered scheme, how do I determine the "years of post-MPF service" for an employment period which contains incomplete months?
The Mandatory Provident Fund Schemes (Exemption) Regulation ("the Exemption Regulation") stipulates that the "years of post-MPF service" means the member's continuous years of service (including part thereof), counted from the date of joining the scheme, 1 December 2000 or (if the member was previously paid on the ground of terminal illness) the date on which the trustee of the scheme received his claim for which benefits were last paid, whichever is the latest, to the earliest of the date of termination of employment, (in the case of the winding up of the scheme) date of cessation of scheme membership, the effective date of withdrawal of the MPF exemption certificate or the date on which the trustee of the scheme receives his latest terminal illness claim for which benefits have not been paid.
In deriving the "years of post-MPF service", service is counted in complete years and months. In certain specific situations not mentioned in the Exemption Regulation and Guidelines, such as incomplete months, the trustee, employer and employee will be called upon to come to a consensus on an arrangement as allowed by the governing rules of the scheme. The employer is also reminded to explain clearly to the member the basis of the calculation agreed upon.
For details, please refer to V.4 Guidelines on MPF Exempted ORSO Schemes - Preservation of Benefits.

 

11
Can an employer forfeit a member’s minimum MPF benefits (“MMB”) following dismissal for cause or as settlement of any losses caused by the member?
Member’s MMB cannot be forfeited upon dismissal for cause and be liable for, and stand charged with the settlement of any losses suffered by the relevant employer caused by a new member. Nor shall it stand charged with any debts owing to the relevant employer or any other person by the new member.
Note: this non-forfeiture requirement also applies to existing members who joined an ORSO scheme before or on 1 December 2000. But the existing member may withdraw and be paid the MMB in accordance with the governing rules of the scheme.
12
Will any surcharge be imposed for contributions in arrears?
The MPFA may impose on the employer of an MPF exempted ORSO registered scheme a surcharge on the amount of contribution arrears. This surcharge is 15% and 20% per annum by the issuance of second and third notices respectively.
The MPFA may also institute legal proceedings against the employer to recover, as a debt due to MPFA, any arrears, contribution surcharge and penalty, if warranted, at any time considered appropriate.
For more details, please refer to Contributions Requirements.
13
What are the periodic fees payable by a relevant employer of an ORSO scheme and how are they determined?
A periodic fee is payable by a relevant employer of an ORSO scheme annually, commencing from (a) the first anniversary date of registration, or (b) the first anniversary of the date of the exemption certificate. These fees should be paid not later than one month after the first day of the period in respect of which they are payable. If a fee is not paid within the one month timeframe, a surcharge equal to the amount of the unpaid fee shall be payable.
The following periodic fees are payable for ORSO schemes:
-ORSO exempted scheme $940
-ORSO registered scheme participating in a pooling agreement$1,800
-ORSO registered scheme not participating in a pooling agreement$3,700

Relevant employers of ORSO schemes should note that it is not MPFA's obligation to issue a Fee Reminder ahead of the due date. Negligence by employers, non-receipt or late receipt of the Fee Reminder and similar reasons do not exempt employers from the statutory requirements of paying periodic fees before the due date.
14
Will a relevant employer receive a receipt from MPFA after paying the periodic fee?
The MPFA pledges to issue an official receipt within eight working days after clearance of the cheque.
15
Do relevant employers need to pay the periodic fee, if the ORSO scheme will be/has been terminated?
A relevant employer of an ORSO registered scheme must give notice of the termination of the scheme to the MPFA within 14 days of the commencement of the termination process. The MPFA will cancel the registration of the ORSO scheme only upon receiving confirmation and any documents necessary to satisfy MPFA of the situation from the employer and designated person of the scheme.
Before the deletion of the registration entry, the Fee Reminder will continue to be sent to the employer. If the periodic fee due date is prior to the effective termination date of the scheme, the employer is still liable to pay the fee and surcharge, if any.
16
Can an employer offset long service or severance payments ("SP/LSP") against ORSO contributions?

If an employer has paid an SP/LSP to an employee, in accordance with the Employment Ordinance (Chapter 57, Laws of Hong Kong), the employer may apply to the administrator of the ORSO scheme for repayment from the employee's vested benefits attributable to the employer's contributions.
With regard to an MPF exempted ORSO registered scheme, employers may make use of the part of a new member's minimum MPF benefits derived from the employer's contributions to offset SP/LSP to which the member is entitled.
For further details, please refer to Offsetting (Severance and Long Service Payments) and V.4 Guidelines on MPF Exempted ORSO Schemes - Preservation of Benefits.
For details about calculating SP/LSP and the timing for payment of SP/LSP, the employer should refer to the relevant provisions of the Employment Ordinance.

17
What are the tax concessions for ORSO contributions?

Under the Inland Revenue Ordinance (Chapter 112, Laws of Hong Kong), certain ORSO contributions are tax deductible.
For a relevant employer, contributions up to 15% of the employee's total emolument made to an MPF exempted ORSO scheme are profits tax deductible.
For the latest updates or details, please visit the Inland Revenue Department’s website.

Last Revision Date: 01/01/2018