Basic Requirements for Registered Schemes

Once a retirement scheme has been registered under the ORSO, it must comply with the ORSO requirements, which include (but are not limited to) the following:


  1. Assets


    Except in special circumstances specified by the ORSO, the assets of a scheme must be kept separate and distinct from, and must not form part of:

    • the assets of the employer of the scheme; or
    • the assets of the administrator of the scheme which are not vested in him in his capacity as such.


    The assets of a scheme must only be applied for the purposes of the scheme.


  2. Trusteeship


    In the case of a scheme governed by a trust, there should be at least one independent trustee who must not be the employer himself, his employee or an associate (as defined in the ORSO) unless such associate is a trust company registered under the Trustee Ordinance (Chapter 29, Laws of Hong Kong).


    A trustee must perform the duties to (1) exercise a reasonable level of care, skill, diligence and prudence; (2) use all relevant knowledge and skill that the trustee may reasonably be expected to have to administer, manage and maintain the scheme; (3) ensure the assets of the scheme are invested in different investments so as to minimize the risk of losses of those assets; (4) put the interests of scheme members before the trustee’s own interest; and (5) act in accordance with the terms of the scheme.


  3. Investment


    No asset of a scheme shall consist of a loan to the relevant employer of the scheme or to his associate. Not more than 10% of the assets of the scheme shall consist of restricted investments as defined in the ORSO.


    Subject to the extent allowed under the ORSO, no asset of the scheme acquired on or after 15 October 1993 shall consist of investments in the share capital of a body corporate which is neither listed on a recognized stock market as defined in the Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong) nor publicly listed on a specified stock exchange as defined in the Securities and Futures Ordinance.


  4. Transfer of Benefits


    The relevant employer of a scheme (“receiving scheme”) must not accept a transfer of benefits from another registered scheme or exempted scheme (“transferring scheme”) unless (1) the transfer is made in accordance with an agreement between the relevant employers of the receiving scheme and transferring scheme; (2) the benefits are payable to a member of the receiving scheme who was a member of the transferring scheme; and (3) the benefits are held in an account in the name of the member under the transferring scheme before the transfer and in an account in the name of the member under the receiving scheme after the transfer.


  5. Funding


    Subject to the provisions of the ORSO, the assets of a scheme shall be sufficient to meet its aggregate vested liability. The scheme shall be funded in accordance with the terms of the scheme and (where the scheme is a defined benefit scheme) the recommendations, if any, contained in an actuarial certificate.


  6. Annual Return / Actuarial Certificate


    The administrator of a scheme is required by the ORSO to keep proper accounts and records regarding all assets, liabilities and financial transactions of the scheme. The administrator is also responsible for preparing financial statements as soon as reasonably practicable after each financial year of the scheme, and submitting such statements to an independent auditor for audit and requiring the auditor to prepare a report on the accounts.


    The relevant employer is required to appoint an auditor to carry out an audit and give a statement to the administrator's auditor regarding the making of contributions to the scheme. This statement from the employer’s auditor must be sent to the administrator’s auditor not later than four months after each financial year of the scheme. For details, please refer to Guidelines on the Statement of the Employer's Auditor.


    Annual returns (in a form specified by the MPFA), auditor’s reports and audited financial statements must be supplied to the MPFA within six months after the end of a scheme’s financial year.


    In respect of a defined benefit scheme, actuarial reviews must be undertaken by an actuary once every three years to ascertain the financial position of the scheme. If the actuary finds that the scheme is insolvent, an annual actuarial review is required. An actuary who prepares the actuarial certificate in respect of a scheme must not be (a) the relevant employer of the scheme; (b) an associate or employee of the employer; or (c) a person having a contract of service with an employee referred to in (b).


    A defined benefit scheme’s actuarial certificate must be supplied to the MPFA within six months after the expiration of the relevant period.


    If a scheme is terminated during a financial year, the MPFA requires the annual return, audited financial statements and auditor’s report to report on the scheme’s position up to the later of the following dates:

    • the scheme’s effective date of termination as appearing on the “Notice of Termination / Winding Up of a Registered Scheme” form; or
    • the date on which all the benefits under the scheme have been paid to members or (if applicable) the assets of the scheme have been transferred to another scheme.

  7. Annual Written Statement by employer


    The relevant employer of a scheme is required to give the MPFA a written statement, within one month after the end of a financial year, to confirm whether at all times during the financial year (a) the scheme by its terms limits membership of the scheme to eligible persons; and (b) all members of the scheme are eligible persons


    If the financial year begins before the commencement date of the Occupational Retirement Schemes (Amendment) Ordinance (“Amendment Ordinance”), i.e. 26 June 2020, no statement needs to be given in respect of that financial year.


  8. Disclosure of Information


    The relevant employer of  a scheme is required to provide certain information to each scheme member, such as relevant information about the scheme and an annual statement of the member’s benefit entitlement under the scheme.


    Scheme members or the scheme’s consultative committee have the right to request certain information from the relevant employer or the scheme’s designated person. The consultative committee can be formed by election amongst scheme members if the scheme has more than 20 members and the majority of the scheme members agree to its formation.


  9. Notification of Certain Changes


    The MPFA must be notified of the following changes within one month of such changes:

    • the name / address of the scheme administrator and the designated person (by the designated person, in a form specified by the MPFA);
    • the name / address of the relevant employer (by the employer, in a form specified by the MPFA); and
    • the administrator / relevant employer / representative employer (by the employer, in a form specified by the MPFA).


    Any changes in the scheme’s domicile shall also be notified to the MPFA as soon as reasonably practicable.


  10. Notification of reportable events


    If the relevant employer or administrator of a 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, keep a record of the particulars, allow the MPFA to inspect the record, and give written notice to the MPFA setting out such further or better particulars of the event as the MPFA requires after the MPFA makes the requirement.


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


    Please refer to Notice of Reportable Events by the Relevant Employer or Administrator of a Registered Scheme.


  11. Settlement of Periodic Fee


    The relevant employer shall pay an annual fee of $3,700 for an individual scheme and $1,800 for a pooled scheme. The fee should be paid to the MPFA within one month after the annual due date, i.e. the last day of each period of 12 months during which the scheme continues to be a registered scheme and beginning on the first or any subsequent anniversary of its registration. If the fee is not paid within one month after the due date, a surcharge equal to the amount of the unpaid fee will be imposed.


  12. Termination / Winding up of Registered Schemes


    In the event that a scheme is terminated or wound up, the relevant employer and designated person of the scheme shall, within 14 days of the commencement of the winding up or termination process, give notice in writing of that fact to the MPFA and each member of the scheme.


For Registered Schemes with an MPF Exemption Certificate


In addition to the above, an MPF exempted ORSO registered scheme (i.e. an ORSO registered scheme granted with an MPF exemption certificate) must also comply with the following:


  1. Option Offer


    Before the commencement of the MPF System, employers who applied for an MPF exemption certificate were required to provide a one-time option to existing ORSO scheme members to remain in the ORSO scheme or become members of an MPF scheme. Since the commencement of the MPF System, these employers are required to provide a one-time option to new eligible employees (if applicable) to choose between the ORSO scheme and MPF scheme.


    In the event that a relevant employer decides to reduce members’ future benefits or rights under an ORSO scheme, the employer must provide each member the option of joining an MPF scheme.


  2. Trustee Standards

    • Trustee which is a company


      1.  In the case of a company incorporated in Hong Kong, it shall be a registered trust company;
      2.  In the case of a company incorporated outside Hong Kong, it shall satisfy the MPFA that:
      1. it is comparable to a registered trust company; and
      2. it has a significant presence and control in Hong Kong.
    • Trustee who is an individual


      1.  In the case of a non-employer trustee, he must satisfy the MPFA that:

      1. he is a person of good reputation and character and, in particular, has not been found guilty, whether in Hong Kong or elsewhere, of an offence involving fraud or dishonesty;
      2. he has the skill, knowledge, experience and qualifications that are, in the opinion of the MPFA, necessary for the successful operation of the scheme;
      3. he has no past or present association (financial or otherwise) that could affect the impartiality of his independent judgment, such as with:
        (a)  the employer of the scheme (except as a professional adviser or, if the employer is a company, as a director of the company);
        (b)  any associate of the employer;
        (c)  any controller of the employer; or
        (d)  any associate of any such controller;
      4. he is not the auditor, investment manager or actuary of the scheme; and
      5. he is ordinarily resident in Hong Kong;
      2. In the case of an employer trustee, he must satisfy the MPFA that he is a person of good reputation and character and, in particular, has not been found guilty, whether in Hong Kong or elsewhere, of an offence involving fraud or dishonesty.


      Where the trustees of a scheme are all individuals, upon any retirement of an existing trustee or appointment of a new trustee, there must be not less than two trustees, of whom not less than one must be a non-employer trustee who complies with the requirements of (1) above.


    • Director of a Trustee


      Any director of a company which is a trustee of a scheme, other than a trustee covered in “Trustee which is a company” above, must satisfy the MPFA that:

      1. he is a person of good reputation and character and, in particular, has not been found guilty, whether in Hong Kong or elsewhere, of an offence involving fraud or dishonesty;
      2. he, or another director of the company, has the skill, knowledge, experience and qualifications that are, in the opinion of the MPFA, necessary for the successful operation of the scheme.

  3. Reporting of Changes in Trustees


    A person who has a duty or power to retire or appoint the trustees of a scheme shall obtain the MPFA’s approval before retiring or appointing the trustee. In the case of a trustee which is a company and not a registered trust company, or a trustee which is a company incorporated outside Hong Kong and not comparable to a registered trust company, the trustee shall obtain the MPFA’s approval in writing before retiring or appointing a director of the trustee.


    Application for pre-approval of the appointment of a trustee or a director of a trustee should be made in writing to the MPFA together with a prescribed form.


  4. Appointment of Investment Managers


    No person shall be appointed to be the investment manager of a scheme except an investment management company that is:


    i.  a corporation licensed to carry on, or an authorized financial institution registered for carrying on, a business in asset management under Part V of the Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong); or
    ii.  a company authorized by an authority recognized by the MPFA to carry on, under the law of a place outside Hong Kong, the business referred to in (i).

  5. Investment Standards

    • The trustees and investment manager of a scheme shall ensure that:
      1. derivatives are not used in such a way as to result in the assets of the scheme becoming leveraged;
      2. money is not borrowed for any of the purposes of a scheme except for the purpose of:
        (a)  paying accrued benefits to or in respect of scheme members, and then only if:
        • the amount borrowed is not more than 10% of the market value of the assets at the relevant time;
        • the borrowing is not part of a series of borrowing; and
        • the period for which the money is borrowed is not more than 90 days; or
        (b)  settling transactions involving the acquisition or disposal of securities or other investments relating to the scheme, and then only if:
        • the period for which the money is borrowed is not more than seven days; and
        • at the time the decision to enter into those transactions was made, it was unlikely that the borrowing would be necessary.
    • The assets of a scheme are leveraged if the effective exposure of the assets exceeds the market value of the assets.

  6. Withdrawal of MPF Exemption Certificate


    An application shall be made by the relevant/representative employer in the prescribed format (i.e. Form WD-ER).


  7. Others


    The relevant employer is also required to:

    1. display the exemption certificate at all times in a conspicuous position at the relevant employer's principal office in Hong Kong. If there is no such office, it must be displayed at each premise where a member of the ORSO scheme to which the certificate relates is employed; and
    2. provide each member under his or her employment with a copy of the exemption certificate.

Last Revision Date: 26/06/2020