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Levy for MPF Schemes Compensation Fund to be suspended from September

Subsequent to the passage of amendments to the Mandatory Provident Fund (MPF) legislation by the Legislative Council, the Mandatory Provident Fund Schemes Authority (MPFA) today (27 July) gazetted a notice to exempt MPF schemes from paying the levy (i.e. 0.03% of the net asset value of MPF schemes) for the MPF Schemes Compensation Fund (Compensation Fund) for financial periods commencing on or after 1 September 2012. Upon suspension of the levy, MPF scheme members can save the expense and more contributions will go towards members' retirement protection.

The Compensation Fund was set up under the Mandatory Provident Fund Schemes Ordinance for the purpose of compensating scheme members for losses of accrued benefits attributable to misfeasance or illegal conduct committed by the approved trustees or by other persons concerned with the administration of the schemes. The Compensation Fund has accumulated to over $1.6 billion since the inception of the MPF System in 2000. No claims have ever been made against the fund.

The Legislative Council earlier passed the Mandatory Provident Fund Schemes (General) (Amendment) Regulation 2012 to introduce an automatic levy triggering mechanism. When the Compensation Fund reserve exceeds the upper level of $1.4 billion or falls below the floor level of $1 billion, the MPFA will suspend or impose the levy respectively.

With effect from 1 September, individual MPF schemes will no longer need to pay the levy for the Compensation Fund upon commencement of their respective new financial period.



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