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Accrued benefits | The amount of each scheme member's beneficial interest in an MPF scheme, including sums derived from the contributions made by or in respect of that scheme member, together with the income or profits arising from any investments of the contributions, but taking into account any losses in respect of the investments and any amounts paid in respect of the scheme member. | ||||||||||||||||||||||||||||||
Annual benefit statement (“ABS”) |
A report issued by an MPF scheme’s trustee to its members to provide them with individual account-level information about their MPF accrued benefits and investments. It is to be provided within three months after the end of the financial period of that scheme, and covers information about:
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Age 65 Plus Fund | One of the two DIS Constituent Funds used in the Default Investment Strategy of a registered scheme. It is a mixed assets fund which invests in a globally diversified manner that targets to invest 20% of its net asset value in higher risk assets (such as global equities) and the rest in lower risk assets (such as global bonds). The investment in those assets may vary from 15% to 25% of the net asset value of the fund at any point in time. | ||||||||||||||||||||||||||||||
Approved pooled investment fund (“APIF”) | A type of investment fund that a constituent fund invests into. An APIF can be in form of an insurance policy or a unit trust. | ||||||||||||||||||||||||||||||
Approved trustee | A company or a natural person approved by MPFA as a trustee in accordance with section 20 of the Mandatory Provident Fund Schemes Ordinance (Chapter 485, Laws of Hong Kong). The term is usually used interchangeably with MPF trustee. | ||||||||||||||||||||||||||||||
Bid spread | Amount charged by the trustee/sponsor upon redemption of units of a Constituent Fund by a scheme member. Bid spread does not apply to an MPF Conservative Fund. Bid spread for a transfer of benefits, withdrawal of benefits in a lump sum, or the first four withdrawals of benefits by instalments in a year can only include necessary transaction costs incurred or reasonably likely to be incurred in selling or purchasing investments in order to give effect to the transfer or withdrawal and are payable to a party other than the trustee. Details are provided in the Fee Table of a scheme. | ||||||||||||||||||||||||||||||
Casual employee | An employee who is at least 18 but under 65 years of age, and is employed in the construction industry or the catering industry on a day-to-day basis or for a fixed period of less than 60 days. | ||||||||||||||||||||||||||||||
Compensation Fund | A fund established under the Mandatory Provident Fund Schemes Ordinance (Chapter 485, Laws of Hong Kong) to compensate members of MPF schemes and other affected persons for losses of accrued benefits attributable to misfeasance or illegal conduct by the trustees of those schemes or by other persons concerned with the administration of those schemes. | ||||||||||||||||||||||||||||||
Conduct requirements | Requirements set out in the Mandatory Provident Fund Schemes Ordinance (Chapter 485, Laws of Hong Kong) on conduct requirements for MPF intermediaries or responsible officer. | ||||||||||||||||||||||||||||||
Continuing Professional Development (“CPD”) |
A continuing training requirement specified under the Guidelines on Continuing Training for Registered Intermediaries. All individual subsidiary intermediaries are required every calendar year to complete:
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Contribution account | An account into which primarily mandatory contributions and any voluntary contributions are paid in respect of any current employment or current self-employment of a member of an MPF scheme. | ||||||||||||||||||||||||||||||
Contribution day |
The day by which an employer is required to pay mandatory contributions for their employees (or by which a self-employed person must make his/her mandatory contributions) to the trustee of the relevant MPF scheme. This is:
In computing a period of time for the first contribution, the above mentioned permitted period for the determination of the contribution day for regular employees or casual employees, as the case may be, will not be extended even if it ends on a Saturday, a public holiday, a gale warning day or a black rainstorm warning day. If the contribution day falls on a Saturday, a public holiday, a gale warning day or a black rainstorm warning day, the contribution day is extended to the next following day which is not a Saturday, a public holiday, a gale warning day or a black rainstorm warning day.
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Contribution holiday | The first 30 days of employment and any incomplete contribution period or calendar month (depending on the remuneration cycle (e.g. weekly, monthly, quarterly) of the employee concerned) that immediately follows, during which regular employees are not required to make mandatory contributions. This does not apply to casual employees and self-employed persons. | ||||||||||||||||||||||||||||||
Contribution period |
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Contribution surcharge | A late charge imposed on employers or self-employed persons who fail to pay mandatory contributions by the contribution day. This surcharge is calculated at 5% of the contribution amount in arrears, and monies received are credited to the MPF accounts of the employees/self-employed persons concerned. | ||||||||||||||||||||||||||||||
Core Accumulation Fund | One of the two DIS Constituent Funds used in the Default Investment Strategy of a registered scheme. It is a mixed assets fund which invests in a globally diversified manner that targets to invest 60% of its net asset value in higher risk assets (such as global equities) and the rest in lower risk assets (such as global bonds). The investment in those assets may vary from 55% to 65% of the net asset value of the fund at any point in time. | ||||||||||||||||||||||||||||||
Custodian | A person or institution to which an approved trustee has delegated care of trust assets. The custodian physically holds the assets and is likely to be an authorized bank or a registered trust company. | ||||||||||||||||||||||||||||||
Debt security |
Debt instruments issued by governments, quasi-governmental bodies or large corporations to raise capital. The issuer promises to repay the debt instrument holders the total amount borrowed. That repayment in most cases is made on maturity although some loans are repayable in instalments. Examples include:
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DIS Constituent Fund | A constituent fund used in the Default Investment Strategy ("DIS"). The two DIS constituent funds are called the Core Accumulation Fund and the Age 65 Plus Fund. | ||||||||||||||||||||||||||||||
Default contribution (“DC”) | The outstanding sum when an employer or a self-employed person fails to pay mandatory contributions to an MPF trustee by the contribution day as required under the MPF legislation. | ||||||||||||||||||||||||||||||
Default fund | A fund designated for each MPF scheme by the trustee, into which a scheme member’s contributions are to be invested in the event that the scheme member fails to select a fund. The default fund can be any type of fund available under the MPF scheme. | ||||||||||||||||||||||||||||||
Defined benefit scheme | An occupational retirement scheme which is not a defined contribution scheme. | ||||||||||||||||||||||||||||||
Defined contribution scheme |
An occupational retirement scheme which provides that the amount of a benefit under the scheme is to be an amount determined solely by reference to:
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Default investment arrangement | A default arrangement provided before the commencement of the Default Investment Strategy (i.e. 1 April 2017) in the governing rules of a registered scheme under which the accrued benefits in an account of a scheme member who has not given any specific investment instructions for those benefits are invested. | ||||||||||||||||||||||||||||||
Default Investment Strategy ("DIS") | A ready-made investment solution with fee control designed for MPF scheme members who are not interested or do not wish to make a selection of funds. DIS is a strategy that uses two constituent funds, i.e. the Core Accumulation Fund and the Age 65 Plus Fund, and automatically reduces risk exposure as a member approaches retirement age. DIS is required by law to be offered in each registered scheme. DIS is also available as an investment choice to scheme members who find it suitable for their own circumstances. | ||||||||||||||||||||||||||||||
Domicile | In relation to an occupational retirement scheme or trust, the country, territory or place by whose system of law the scheme or trust is governed. | ||||||||||||||||||||||||||||||
Early retirement | Normally, a member of an MPF scheme is entitled to withdraw his/her accrued benefits held in the scheme upon reaching the age of 65. When a scheme member has reached the age of 60 and has ceased all employment and self-employment with no intention of becoming employed or self-employed again, he/she may also withdraw his/her accrued benefits held in the scheme in a lump sum or by instalments on the ground of early retirement. | ||||||||||||||||||||||||||||||
Employee Choice Arrangement (“ECA”) | Allows employees to transfer the accrued benefits (i.e. the accumulated contributions and investment returns) arising from their mandatory contributions (not their employer’s portion) in their MPF contribution accounts during the period they are working for their current employer. Such benefits can be transferred to a trustee and a scheme of their own choice on a lump sum basis once every calendar year. | ||||||||||||||||||||||||||||||
Employer sponsored scheme | An MPF scheme whose membership is limited to the employees of a single employer and its associated companies (if any). | ||||||||||||||||||||||||||||||
Exempt person |
A person in any one of the following categories:
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Fee table | A standardized table showing fees, expenses and charges imposed on an MPF scheme at a glance. The format of the Fee Table is the same across different trustees to help scheme members make basic comparison of fees, expenses and charges across different schemes and service providers. The Fee Table is contained in the MPF Scheme Brochure of a scheme. | ||||||||||||||||||||||||||||||
Financial penalty | A penalty imposed by MPFA on employers, self-employed persons or trustees who fail to comply with the requirements under the Mandatory Provident Fund Schemes Ordinance (Chapter 485, Laws of Hong Kong) and the Mandatory Provident Fund Schemes (General) Regulation ("General Regulation") (Chapter 485A, Laws of Hong Kong). The amounts of financial penalty are specified in Schedule 4 to the General Regulation. | ||||||||||||||||||||||||||||||
Forward pricing | The pricing mechanism on the basis of which MPF funds operate. Since offer and redemption prices of an MPF fund are calculated on the basis of its net asset value divided by the number of units outstanding, the unit price is not known until the end of a business day. A buy or sell order is executed on the next available issue price according to the valuation frequency and pricing method adopted by the trustee/fund administrator. In other words, the execution price may be better or worse than the last available price known at the time the buy/sell order is made. | ||||||||||||||||||||||||||||||
Frontline regulator (“FR”) |
Under new regulatory regime, MPFA can assign an industry regulator as the frontline regulator for each MPF intermediary. Frontline regulators are responsible for the supervision and investigation of MPF intermediaries according to their core business, specifically:
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Fund expense ratio (“FER”) | A ratio that measures the expenses of an MPF fund as a percentage of fund size. Whilst scheme members do not directly pay fund expenses, such expenses do impact directly on the investment returns of the fund. Fees and charges are generally the main component of fund expenses. The FER is calculated for each financial period of a constituent fund based on data from the previous financial period. The published FER will not reflect any increases or decreases in fees, charges or expenses in the current financial period. The FER is provided in the Fund Fact Sheet of a scheme. It is not necessary for funds with less than two years of history to show an FER. | ||||||||||||||||||||||||||||||
Fund fact sheet | Fund Fact Sheet is like the report card of an MPF fund, reporting on how the fund is doing. It provides key summary information on a constituent fund, such as fund size, investment objectives, portfolio allocation, main holdings in the portfolio, fund performance, fund expense ratio, fund risk indicator and future outlook for each constituent fund in a scheme. Fund Fact Sheet is issued on a half-yearly basis. | ||||||||||||||||||||||||||||||
Fund risk indicator | Fund risk indicator shows the risk of an MPF fund. It is provided in the Fund Fact Sheet and helps scheme members choose and decide on the risk level to take in their MPF investment. The risk of a fund is important because research suggests that there is a trade-off between risk and investment return. A fund with higher risk tends to show greater volatility of return than a low-risk fund. It also has the potential to offer higher expected return than a low-risk fund. Its downside potential is increased similarly. | ||||||||||||||||||||||||||||||
Fund size | The net asset value of a constituent fund as at the reporting date of the Fund Fact Sheet. | ||||||||||||||||||||||||||||||
Future contribution | All future monies not yet received and allocated to a member's MPF account, which may be contributions to be remitted by his/her employer for future contribution periods. | ||||||||||||||||||||||||||||||
Guarantee/qualifying condition | A condition normally imposed by a Guaranteed Fund. Upon meeting that condition, fund holders can receive the guaranteed return when redeeming the fund. | ||||||||||||||||||||||||||||||
Guarantee fee | The amount deducted out of the assets of a Guaranteed Fund for the purpose of providing the guarantee. The fee is usually charged as a percentage of the fund’s net asset value. | ||||||||||||||||||||||||||||||
Higher risk assets |
The MPF legislation requires that a DIS Constituent Fund of a registered scheme should target to invest certain percentage of their net asset value in higher risk assets. The following assets are identified as “higher risk assets” in the MPF Guidelines issued by MPFA: (a) shares; (b) warrants; (c) financial futures contracts and financial option contracts that are used other than for hedging purposes; (d) interests in an index-tracking collective investment scheme that tracks an index comprised of equities or equities-like securities; and (e) any investment approved by the Authority under section 8(1)(c), 8(2)(b) or 8(2)(c) of Schedule 1 to the Mandatory Provident Fund Schemes (General) Regulation excepting the following: (i) that part of a unit trust or mutual fund authorized by the Securities and Futures Commission that is invested in assets or securities other than those set out in items (a) to (d) above. |
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Index-tracking collective investment scheme | A collective investment scheme with the sole investment objective of tracking or replicating the investment performance of an index in either equities or debt securities. This type of fund aims at producing or achieving investment returns that closely match or correspond to the performance of the index being tracked. | ||||||||||||||||||||||||||||||
Industry regulator |
Industry regulator means:
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Industry scheme | A provident fund scheme registered under section 21A of the Mandatory Provident Fund Schemes Ordinance (Chapter 485, Laws of Hong Kong). This type of scheme is specially designed for employees who are engaged in industries with high labour mobility. Currently there are two industry schemes, each of which is available to employees and employers in the construction and catering industries. | ||||||||||||||||||||||||||||||
Investment objective | Information about the types of instruments the pooled contributions will be invested in and the level of return and growth the fund aims to achieve. | ||||||||||||||||||||||||||||||
Mandatory contribution |
In the case of an employee, an amount which is equal to 10% of the employee’s relevant income (5% payable by the employer out of its own funds, 5% payable by the employee to be deducted from his/her relevant income) except in the following cases:
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Master trust scheme |
An MPF scheme (excluding Industry Schemes) whose membership is open to:
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Membership certificate |
A certificate issued to a relevant employee by the trustee of an MPF scheme within 60 days of the employee becoming a member of the scheme, showing:
An MPF trustee is not required to give a membership certificate to a casual employee who is a member of an industry scheme.
* With effect from 1 August 2015, the notice of participation replaces the membership certificate. |
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Minimum MPF benefits (“MMB”) |
In relation to a member of an MPF exempted ORSO registered scheme, the lesser of the following:
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MPF exempted ORSO scheme | An occupational retirement scheme in respect of which an exemption has been granted under section 5 of the Mandatory Provident Fund Schemes Ordinance (Chapter 485, Laws of Hong Kong). Members, or a class of members, of such a scheme and their employer are exempted from the operation of all or any specified provisions of the Ordinance. | ||||||||||||||||||||||||||||||
MPF principal intermediary (“PI”) |
A business entity (Type A regulatee) registered by MPFA as an intermediary for carrying on regulated activities. It may be:
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MPF registered intermediary / registered intermediary |
MPF registered intermediary / registered intermediary means:
The MPFA keeps a Register of registered intermediaries. The Register enables a member of the public to, by inspecting the Register or, upon payment of a fee, by obtaining a copy of an entry in or extract of the Register, ascertain whether he/she is dealing with a registered intermediary in any regulated activity, or to ascertain the particulars of the registration of a person as a principal or subsidiary intermediary.
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MPF subsidiary intermediary / subsidiary intermediary (“SI”) |
A person (Type B regulatee) registered by MPFA as an intermediary for carrying on regulated activities on behalf of the principal intermediary to which the person is to be attached. The person may be:
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Net asset value (“NAV”) | In respect of a constituent fund or class of a constituent fund, the total value of asset net of any liabilities of the fund. | ||||||||||||||||||||||||||||||
Notice of acceptance |
A notice given to a scheme applicant conveying acceptance into an MPF scheme. This is issued by the relevant MPF trustee within 30 days from:
* With effect from 1 August 2015, the notice of participation replaces the notice of acceptance. |
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Notice of participation |
A notice given to an applicant to confirm membership of or participation in a registered scheme by the trustee of an MPF scheme within 30 days after whichever is the later of the following dates:
The notice of participation shows:
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Occupational retirement scheme (“ORSO scheme”) |
Subject to section 2(6) of the Occupational Retirement Schemes Ordinance (Chapter 426, Laws of Hong Kong), any scheme not being a contract of insurance under which benefits are payable only upon the death or disability of the insured, which-
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Offer spread | Amount charged by the trustee/sponsor upon subscription of units of a Constituent Fund by a scheme member. Offer spread does not apply to an MPF Conservative Fund. Offer spread for a transfer of benefits can only include necessary transaction costs incurred or reasonably likely to be incurred in selling or purchasing investments in order to give effect to the transfer and are payable to a party other than the trustee. Details are provided in the Fee Table of a scheme. | ||||||||||||||||||||||||||||||
Offering document / MPF Scheme Brochure | A document inviting participation in an MPF scheme by prospective members. It should contain the necessary information for prospective members to make informed decisions about the scheme. It contains important information about the scheme, operators, constituent funds, contributions and withdrawals, fees, expenses and charges, warnings and other important issues. | ||||||||||||||||||||||||||||||
On-going cost illustration (“OCI”) | An illustration of the total effect of fees, expenses and charges payable in dollar terms by converting the latest Fund Expense Ratio figure into dollars and adding that to any direct charges that a scheme member might pay, such as a contribution charge or offer spread. It shows the dollar costs of investing HK$1,000 in different funds over periods of one, three and five years under an assumed annual rate of investment return of 5%. | ||||||||||||||||||||||||||||||
ORSO exempted scheme |
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ORSO registered scheme | An occupational retirement scheme registered under section 18 of the Occupational Retirement Schemes Ordinance (Chapter 426, Laws of Hong Kong). | ||||||||||||||||||||||||||||||
ORSO scheme administrator |
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Participation certificate |
A certificate issued by MPFA to an employer as a documentary proof of its registration in an MPF scheme, which the employer is required to display at its premises where employees are employed or at its principal place of business in Hong Kong. The participation certificate shows:
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Payroll cycle | The intervals at which the employee is paid relevant income by the employer for work done under his/her employment contract. It is common for employees to be paid monthly, though there are more frequent cycles, such as half-monthly or weekly. | ||||||||||||||||||||||||||||||
Performance requirement |
A requirement for:
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Permitted period |
Permitted period in the context of performing enrolment for an employee/a self-employed person into an MPF scheme:
If the last day of a permitted period is a Saturday, a public holiday, a gale warning day or a black rainstorm warning day, the permitted period is extended to end on the next following day which is not a Saturday, a public holiday, a gale warning day or a black rainstorm warning day.
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Personal account | An account holding a scheme member’s MPF accrued benefits, including contributions and investment returns, in respect of former employment or self-employment. New contributions to this account are generally not accepted, though the accrued benefits will continue to be invested according to the scheme member’s instructions, and thus fees and charges may still be incurred. | ||||||||||||||||||||||||||||||
Prescribed savings rate | A rate prescribed by MPFA on a monthly basis as the interest rate payable in respect of a Hong Kong dollar savings account or the average of the interest rates payable by different authorized financial institutions on Hong Kong dollar savings accounts. If the investment return of an MPF Conservative Fund does not exceed the prescribed savings rate in a month, no administrative expense is allowed to be deducted from the fund for that month. | ||||||||||||||||||||||||||||||
Qualifying examination | An examination designed for applicants for MPF intermediaries and specified by MPFA. | ||||||||||||||||||||||||||||||
Recognized reference portfolio | A disclosure tool developed by the fund industry and recognized by MPFA for providing a reference point for performance comparison of a DIS Constituent Fund. The reference portfolio for each DIS Constituent Fund is a globally diversified portfolio with the weighting to higher risk assets consistent with the requirements for the DIS Constituent Fund as set out in the MPF legislation. | ||||||||||||||||||||||||||||||
Recurrent out-of-pocket expenses | In relation to a DIS Constituent Fund, the expenses incurred by an approved trustee of the fund that are charged to or imposed on the fund or a scheme member who invests in the fund and are incurred on a recurrent basis in the discharge of the approved trustee’s duties to provide services in relation to the fund. They include auditor’s fee for annual audit, printing expenses and postage, fund price publication expenses, bank charges, governmental fees and charges (including but not limited to stamp duty and licence fee), other charges and expenses properly incurred and permitted under the Mandatory Provident Fund Schemes Ordinance, the regulations and the governing rules of the relevant registered scheme. | ||||||||||||||||||||||||||||||
Registered scheme |
Also known as an MPF scheme, a provident fund scheme registered under the relevant provisions of the Mandatory Provident Fund Schemes Ordinance (Chapter 485, Laws of Hong Kong) as:
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Regular employee | An employee who is at least 18 but under 65 years of age and has been employed in any industry for a continuous period of 60 days or more. | ||||||||||||||||||||||||||||||
Regulated activity |
A person carries on a regulated activity if the person:
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Regulated person | A registered intermediary or a responsible officer of a principal intermediary. | ||||||||||||||||||||||||||||||
Relevant employee | An employee who is at least 18 but under 65 years of age. | ||||||||||||||||||||||||||||||
Relevant income | In relation to a relevant employee, any wages, salary, leave pay, fee, commission, bonus, gratuity, perquisite or allowance, expressed in monetary terms, paid or payable by an employer (directly or indirectly) to that relevant employee in consideration of his employment under that contract, but not including severance payments or long service payments under the Employment Ordinance (Chapter 57, Laws of Hong Kong). | ||||||||||||||||||||||||||||||
Remittance statement |
A statement provided by an employer to the trustee of an MPF scheme along with the contributions for a contribution period, showing:
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Reserve charge | The amount deducted out of the assets of a Guaranteed Fund for the purpose of providing the guarantee. The fee is usually charged as a percentage of the net asset value of a Guaranteed Fund. | ||||||||||||||||||||||||||||||
Responsible officer | In respect of an MPF principal intermediary, an individual approved as an officer with specified responsibilities in relation to the principal intermediary under sections 34T(2)(a)(ii), 34T(2)(b)(iii) or 34W(4) of the Mandatory Provident Fund Schemes Ordinance (Chapter 485, Laws of Hong Kong). | ||||||||||||||||||||||||||||||
Restricted investment |
In relation to a registered ORSO scheme,
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Scheme administrator |
In relation to an MPF scheme, an administrator responsible for the scheme’s administration and for fulfilling certain functions, including:
For some schemes, the scheme administrator is also the trustee of the scheme.
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Self-employed person | A person whose relevant income is derived from the person’s production of goods or services in Hong Kong, or trade in goods or services in or from Hong Kong. | ||||||||||||||||||||||||||||||
Special voluntary contribution | Contributions unrelated to employment paid directly by a relevant employee to the MPF trustee of an MPF scheme, without the involvement of his/her employer. | ||||||||||||||||||||||||||||||
Tax Deductible Voluntary Contributions (TVC) | Contributions that are paid into a TVC account under section 11A of the Mandatory Provident Fund Schemes Ordinance. A scheme member who wishes to make TVC should open a TVC account in an MPF scheme. TVC can be made by the member directly to the scheme without going through his/her employer. Only contributions that are made to the TVC accounts are eligible for tax deduction under salaries tax or tax under personal assessment. To meet the purpose of encouraging extra savings for retirement, a TVC account holder can only withdraw the TVC upon reaching age 65 or on other statutory grounds. | ||||||||||||||||||||||||||||||
Transferee trustee | The trustee of the MPF scheme to which the accrued benefits of a member of another MPF scheme are to be transferred. | ||||||||||||||||||||||||||||||
Transferor trustee | The trustee of the MPF scheme from which the accrued benefits of a scheme member are to be transferred, whether to another MPF scheme or to another account within the same scheme. | ||||||||||||||||||||||||||||||
Unclaimed benefit | Accrued benefits to which an MPF scheme member or some other persons have become entitled to be paid and for which they may or may not have lodged a claim become unclaimed benefits if after a six-month period the trustee has been unable to locate the individual for payment. | ||||||||||||||||||||||||||||||
Vested benefit | In relation to a member of an occupational retirement scheme, the amount of benefits the member is entitled to receive, either immediately or prospectively, according to the scheme rules. | ||||||||||||||||||||||||||||||
Vesting percentage | A percentage used to determine a scheme member's benefits upon termination of service with an employer. In the case of an MPF scheme, if the employer has made voluntary contributions for the employee, a vesting percentage on the accumulated account balance attributable to the voluntary contributions made by the employer will usually be applied based on such criteria as the member’s age or years of service. | ||||||||||||||||||||||||||||||
Voluntary contribution | The amount of contributions paid by employers, employees or self-employed persons to an MPF scheme exceeding the amount of mandatory contributions required to be paid under the MPF legislation. |
Last Revision Date: 03/04/2020