8 December 2000

To : All approved trustees of registered MPF schemes
All registered MPF corporate intermediaries

Dear Sirs,

Enrolment and Contribution Arrangement of Self-Employed Persons ("SEPs")

It has recently come to the attention of the Authority that certain staff of approved trustees or registered MPF corporate intermediaries appeared to be not sufficiently familiar with the legislative requirements concerning the enrolment and contribution arrangement of SEPs. As a result, some SEPs have filed complaints with the Authority in this regard. This circular letter is intended to clarify the relevant issues so that only factually correct information would be provided to the SEPs.

A SEP may elect to contribute to a MPF scheme on a yearly or monthly basis. For a SEP who elects to contribute on a yearly basis, his contribution period is the year that coincides with each financial period of the relevant scheme. For a SEP who elects to contribute on a monthly basis, his contribution period is each period commencing on the day in each month specified by the SEP in a written notice to the relevant trustee as the commencing day. For example, for a SEP who nominates the 15th as the commencing day of his contribution period, his contribution period will be from the 15th of each month to the 14th of the following month. If the nominated commencing day is the 1st, the contribution period will simply be a calendar month. It has come to the attention of the Authority that the application forms of certain schemes have not provided for SEPs to nominate a commencing day for their monthly contribution period and such information has not been collected from SEPs by other means. In such circumstances, the SEPs who have already enrolled should be clearly informed of the contribution period that has been set for them by the relevant trustee, for example, by stating explicitly the contribution period in any payment notices prepared for such SEPs. Should any SEP object to that contribution period, the relevant trustee must change the contribution period according to the choice of the SEP concerned.

Approved trustees are strongly advised to review their application forms for SEP enrolment and, where applicable, add a field for the applicant to nominate the commencing day of his contribution period in case the monthly contribution basis is elected in order to comply with the legislative requirements.

A SEP is required to make mandatory contribution to the scheme before the end of each contribution period. The contribution day in relation to a SEP is defined in the MPF legislation as the last day of the contribution period. The trustee concerned and the SEP may agree on an earlier payment date for convenience, but the mandatory contribution is not legally due until the contribution day. The trustee is required to inform the Authority if a SEP fails to pay a mandatory contribution by the end of the settlement period, i.e. 30 days after the contribution day. Please note that the 30 days settlement period commences on the day after the contribution day, and not the agreed payment day between the trustee and the SEP. Approved trustees should ensure that their scheme administration system and operational procedures comply with the legislative requirements in this respect.

The Authority would like to stress again that the representation made by MPF service providers or intermediaries must be factually correct. You should ensure that your MPF intermediaries understand the above requirements and explain such requirements accurately to prospective and participating SEPs. If a MPF intermediary has given incorrect or misleading advice, he or she could have breached the Code of Conduct for MPF Intermediaries. The Authority would not hesitate to take action against the parties and individuals responsible.

Should you have any queries on the above, please do not hesitate to contact your case officer.

Yours sincerely,

(Raymond Tam)
Executive Director
Services Supervision

Last Revision Date: 17/10/2014