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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 the ORSO and meet its definition of "occupational retirement scheme" are required to apply to the 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 ORSO?

In addition to the ORSO, MPF exempted ORSO schemes are governed by the Mandatory Provident Fund Schemes (Exemption) Regulation ("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 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, trustees' directors, 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 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 should be 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 the MPFA within one month of certain changes.

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 the MPFA is required for the appointment or retirement of an individual trustee and/or corporate trustee that is not a registered trust company. Please refer to Question #6.

6
What changes to an ORSO scheme require prior approval of the MPFA?
In the case of an MPF exempted ORSO registered scheme, prior approval from the 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 he is unable to meet the submission deadline?

 

  • The relevant employer is required to submit the employer’s auditor’s statement (i.e. Forms A & B) to the administrator’s auditor not later than four months after each of the scheme’s financial years.
  • The relevant employer is required to give the MPFA an written statement in relation to the membership of the scheme within one month after the end of a financial year.

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 or representative employer of an ORSO exempted scheme shall, for each period of 12 months beginning on the date of the exemption certificate or an anniversary of the date, give the MPFA an annual report which consists of the following documents
    a. an annual return;
    b. a written statement on ongoing compliance with the employment based criterion (“employment based statement”); and
    c. 
    1. for schemes exempted under section 7(4)(a), documentary evidence on the validity of the registration or approval with an overseas authority (“documentary evidence”); or
    2. for schemes exempted under section 7(4)(b) or (c), a written statement of the total number of scheme members and the number of members who were Hong Kong permanent identity card holders on the date of the statement (“membership statement”).
    The annual report shall be provided within one month after the expiration of the 12-month period or such longer period as the MPFA may allow.

    If the date of the exemption certificate or an anniversary of the date falls before the commencement date of the Occupational Retirement Schemes (Amendment) Ordinance 2019, i.e. 26 June 2020, no annual return or employment based statement needs to be given in respect of the 12-month period beginning on the date of the exemption certificate or the anniversary. The relevant employer or representative employer needs only provide the documentary evidence or membership statement for that period. The documentary evidence or membership statement shall be provided within 14 days after the expiration of that period or such longer period as the MPFA may allow.

    For more details, please refer to Documents to be Provided Annually.

     

      9
      What are minimum MPF benefits ("MMB")?
      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 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 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 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) the 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 MMB following dismissal for cause or as settlement of any losses caused by the member?
      A member’s MMB cannot be forfeited upon dismissal for cause or 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 on or before 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 upon 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 the MPFA, any arrears, contribution surcharge and penalty (if warranted) at any time it deems 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 relevant employer of an ORSO scheme should pay a periodic fee in respect of each period of 12 months 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 the 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 the 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 requirement of paying periodic fees before the due date.
      14
      Will a relevant employer receive a receipt from the 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 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 from the employer and designated person confirmation of termination and any documents necessary to satisfy the MPFA of the situation.

      Before the deletion of the registration entry, the fee reminder will continue to be sent to the employer. If the periodic fee due date falls before 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, the employer may make use of the part of a new member's minimum MPF benefits derived from the employer's contributions to offset the 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 ORSO scheme are profits tax deductible.

      For the latest updates or details, please visit the Inland Revenue Department’s website.

      18
      In what circumstances the employer of a registered scheme is required to report reportable events and what kinds of information should be provided?

      If the relevant employer of a registered scheme becomes aware of a reportable event that occurs on or after 26 June 2020, he must within seven working days give written notice to the MPFA setting out the particulars of the event such as the date the event occurred, case details and details of remedial action planned or taken, etc.

      “Reportable event” refers to non-compliance with requirements in relation to scheme assets, members’ benefits, funding, trusteeship, investment, transfer of benefits or eligible person.

      19
      What is the impact of Automatic Exchange of Financial Account Information (AEOI) on me when enrolling to an ORSO scheme?
      With effect from 1st January 2020, the employer should ensure that the new employee completes, signs and submits the self-certification form properly and promptly. Otherwise, account opening process will be adversely affected and could not be completed.

      For details in relation to AEOI, please visit:

      The FAQ for AEOI by Hong Kong Trustees' Association

      AEOI webpage in Inland Revenue Department
       
       

      Last Revision Date: 26/06/2020