To illustrate, let’s assume there are two employees, Ah Wah and Jane, working for the same company and joining the same ORSO scheme. These are their employment details:
Ah Wah | Jane | ||
---|---|---|---|
Years of service | 5 Years | Years of service | 2 Years |
Benefits derived from the employer’s contributions | $33,000 | Benefits derived from the employer’s contributions | $11,500 |
Benefits derived from the employee’s contributions | $33,000 | Benefits derived from the employee’s contributions | $11,500 |
Average monthly relevant income in the final year of service | $8,000 | Average monthly relevant income in the final year of service | $6,800 |
*Vesting Scale of Benefits in the ORSO Scheme | |
Completed Years of Service | % of Employer’s Accumulation |
Less than 3 | Nil |
3 but less than 4 | 30% |
4 but less than 5 | 40% |
5 but less than 6 | 50% |
6 but less than 7 | 60% |
7 but less than 8 | 70% |
8 but less than 9 | 80% |
9 but less than 10 | 90% |
10 or over | 100% |
*Vesting Scale: This specifies an employee’s entitlement to the benefits derived from the employer’s contributions based on the employee’s years of service.
Step 1: | Calculating the entitlement to the benefits derived from the employer’s contributions upon leaving service: |
Benefits derived from the employer’s contributions ![]() x Vesting scale based on the employee’s total years of service |
Since Ah Wah’s and Jane’s years of service are different, their entitlements to the benefits derived from the employer’s contributions are not the same:
Ah Wah | Jane | ||
---|---|---|---|
Entitlement under the vesting scale | 50% | Entitlement under the vesting scale | 0% |
Benefits derived from the employer’s contributions under the vesting scale | 50% of $33,000 = $16,500 | Benefits derived from the employer’s contributions under the vesting scale | 0% of $11,500 = $0 |
Why?Under the scheme rules, Ah Wah with more than three years of service is entitled to 50% of the benefits derived from the employer’s contributions. | Why?Under the scheme rules, Jane with less than three years of service is not entitled to the benefits derived from the employer’s contributions. |
Step 2: | Calculating MMB: |
Both Ah Wah and Jane joined the ORSO Scheme after the launch of the MPF System (i.e. after 1 December 2000). Their MMB upon ceasing employment are whichever is the lesser as calculated in (a) and (b) as shown below:
Calculating MMB | Ah Wah | Jane | ||
---|---|---|---|---|
| $33,000 + $16,500 = $49,500 | $11,500 + $0 = $11,500 | ||
| $8,000 x 5 x 1.2 = $48,000 | $6,800 x 2 x 1.2 = $16,320 | ||
MMB = Lesser of (a) and (b) | $48,000 | $11,500 | ||
Excess amount to be withdrawn in accordance with the scheme rules of the ORSO scheme: (a) - MMB | $49,500 - $48,000 = $1,500 | $11,500 - $11,500 = $0 |
For more details, please click to view V.4 Guidelines on MPF Exempted ORSO Schemes - Preservation of Benefits
Last Revision Date: 06/09/2016