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ORSO Scheme Members


Definition of ORSO Schemes

Occupational Retirement Schemes, also known as ORSO schemes, are retirement schemes set up voluntarily by employers prior to the launch of the MPF System to provide retirement benefits for their employees. ORSO schemes are regulated under the Occupational Retirement Schemes Ordinance. Since they are not mandatory, scheme rules and provisions, including the amount of contributions, whether employees have to contribute and the investment choices, are drawn up by individual employers.

Shortly before the implementation of the MPF System in 2000, ORSO schemes were allowed to apply for MPF exemption. ORSO schemes which have been granted MPF exemption can continue to operate, but under the condition that your employer must also provide an MPF scheme at the same time for you to choose between the two. The choice is in your hands.

For an ORSO scheme which has not obtained MPF exemption, its employer must enroll his/her employees into an MPF scheme. The employer may choose to:
- terminate the ORSO scheme; or
- continue to operate the ORSO scheme so that the benefits of previously enrolled employees can continue to be invested in the scheme (scheme closed to new employees); or
- operate the scheme as a top-up scheme so that all employees can enjoy both MPF and ORSO benefits. 
 
If you wish to check whether an ORSO scheme has been granted MPF exemption, you may search the public registers for MPF Exempted ORSO Schemes here. In addition to information on MPF Exempted ORSO Schemes, information on all ORSO schemes is also available in the ORSO public register here.

Differences Between MPF and ORSO Schemes

The major differences between an MPF scheme and an ORSO scheme are as follows:
  1. Contribution arrangement: For ORSO schemes, the amount of contributions is determined by the employer, and contributions can be made solely by the employer or by both the employer and employee. For MPF schemes, the law requires both employer and employee to contribute 5% of the employee’s relevant income.
  2. Definition of income: The definition of employee’s income is not the same under MPF and ORSO schemes. For MPF schemes, income is defined under the MPF legislation and all income expressed in monetary terms, including wages, salary, leave pay, fees, commissions, bonuses, gratuities, perquisites or allowances are regarded as “relevant income” used for calculating contributions. Income, however, is not defined in the ORSO legislation and it is common practice in many ORSO schemes that only the employee’s basic salary is used for calculating contributions. Overtime allowances and bonuses, for example, are often disregarded for contribution purposes.
  3. Vesting scale: There is a vesting scale for every ORSO scheme, meaning the amount of accrued benefits derived from the employer’s contributions that can be vested in the employee, is based on the years of service of the employee. The longer your years of service, the more benefits you are entitled to. But under an MPF scheme, the monthly mandatory contributions made by the employer are vested fully and immediately in the employee, regardless of the years of service.
  4. Investment choices: For ORSO schemes, in general, both the scheme and investment portfolio are chosen by the employer. For MPF schemes, the employer chooses the MPF scheme and the employee is free to choose the investment portfolio under the scheme. You therefore have a higher degree of control over your investment under the MPF System.
  5. Compensation fund: Under the MPF System, a compensation fund has been set up to compensate MPF scheme members and other affected persons for losses of accrued benefits due to misfeasance or illegal conduct by the trustees or by other persons involved in the administration of MPF schemes. No such fund, however, is available for ORSO schemes.
  6. Checking account status: Apart from receiving a benefit statement yearly, members of ORSO schemes normally need to check their account status through their employers. For MPF schemes, members may check their account status regularly by themselves through assorted means provided by the trustees.

 

MPF or ORSO?


If your employer operates an MPF exempted ORSO scheme that you, as a new employee, are eligible to join, he/she should also provide an MPF scheme for you, as a new employee, to choose between the two. As required by the law, within the first 10 days of your employment, your employer must disclose detailed information of both schemes to you for reference, particularly on contribution arrangements, vesting scales and the minimum MPF benefits, so that you are aware of the differences between the schemes.

You should notify your employer of your decision regarding your choice of MPF or ORSO scheme in writing within the first 30 days of employment. You have a one-time option to choose between the two. In other words, once a decision is made, you will not be able to change your mind. If your employer does not hear from you by the deadline, you will be deemed to have chosen an MPF scheme and your employer should then enrol you in an MPF scheme.

You may find that the contribution provisions of ORSO schemes sound more attractive than MPF schemes. Under certain ORSO schemes, only employers make contributions, the contribution rate may be higher than the 5% required under an MPF scheme, and there may be no maximum cap on the contribution amount. You should, however, also pay attention to the vesting scale.  According to the most common vesting scale under ORSO schemes, accrued benefits are not vested in the employee until after three years of service. That means if your years of service is less than three years, you will not be entitled to any of your employer’s contributions. It may take up to 10 years of service before you can be fully entitled to all contributions made by your employer. In contrast, if you choose to join an MPF scheme, the monthly mandatory contributions made by your employer are vested fully and immediately in you.

Remember, the option to choose between the two schemes is offered only once, so you should not make your decision lightly. Take your time to study the materials provided by your employer and ensure you fully understand the details of the two schemes before making your final decision.

Minimum MPF Benefits

If you joined an ORSO scheme before or on the the launch of the MPF System, that is, before or on 1 December 2000, upon your termination of employment, you may generally withdraw all your accrued benefits under the ORSO scheme in accordance with the governing rules of the scheme.

However, if you joined an MPF-exempted ORSO registered scheme after 1 December 2000, you have to transfer and preserve a sum equivalent to the minimum MPF benefits (“MMB”) from your ORSO account to an MPF account of your choice upon termination of employment. The preserved amount can be withdrawn when you reach the age of 65 or when you meet one of the early withdrawal criteria under the MPF System. Generally, all residual funds in the ORSO scheme after preserving the MMB, if any, can be withdrawn in accordance with the governing rules of the scheme.

The MMB means the lesser of the following sums:

Calculation method 1:
The member's benefits accrued under the scheme during the course of employment, i.e. benefits derived from the employee’s contributions, plus the benefits derived from the employer’s contributions under the vesting scale; or

Calculation method 2:
The member's average monthly relevant income in the final year of service (capped at $30,000) multiplied by the years of post-MPF service, the sum of which is then multiplied by 1.2.  

Note: The applicable monthly maximum relevant income for the purpose of determining a scheme member’s average monthly relevant income in the final year of service has been increased from $25,000 to $30,000, effective 1 June 2014.

Offsetting of Long Service Payment and Severance Payment

By law, your employer can offset the LSP or SP paid to you with the accrued benefits derived from the employer’s contributions in an MPF-exempted ORSO scheme. The offsetting mechanism and procedures are exactly the same as those in MPF schemes. In fact, the offsetting arrangement originated under the Employment Ordinance and was applicable to ORSO schemes well before the implementation of the MPF System. More information can be found here.

Protecting Your Rights

The MPFA is also responsible for overseeing the Occupational Retirement Schemes Ordinance. If you suspect your ORSO employer has failed to make contributions for you, please contact the MPFA to lodge a complaint. The easiest way to do so is to call our hotline at 2918 0102, between 8:45 am and 5:45 pm, Monday to Friday.

Other means for filing a complaint can be found here.

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