Need Expert Financial Advice?
or Call Us at: +852 3728 0490
Introduction
The Occupational Retirement Schemes Ordinance (“ORSO”) came into force on 15 October 1993, and is the governing legislation for the regulation of voluntary occupational retirement schemes operating in or from Hong Kong. The rules of individual ORSO schemes such as coverage, enrolment arrangements, contribution rate and vesting scale are specified in the respective governing rules of the schemes, and they do vary scheme by scheme.
Things to consider
The investment choices within ORSO schemes, like the MPF are relatively restricted, however they typical comprise of the following:
– Money market funds: invest generally in short-term, high quality interest bearing securities, with the aim of earning an interest rate higher than that of savings deposits. An MPF Conservative Fund is essentially a money market fund which invests exclusively in Hong Kong-dollar assets either in short-term bank deposits or short-term bonds.
– Guaranteed funds: provide some form of guarantee to scheme members investing in the fund, usually on the capital invested or on a minimum rate of return.
– Bond funds: invest in bonds or debt instruments issued by governments, public organisations, banks, commercial organisations or supranational agencies like the World Bank.
– Mixed assets funds: invest primarily in a mix of bonds and equities. Mixed assets funds have different risk levels, depending on the allocation between equities and bonds.
– Equity funds: seek a higher rate of return through capital appreciation of stocks (or shares), traded mainly on approved stock exchanges. The risks of an equity fund are generally higher than those of other types of funds.
– Others: index funds have the sole investment objective of tracking the performance of a particular market index such as Hang Seng Index.
Summary
Occupational Retirement Schemes (ORSO schemes) are retirement schemes set up voluntarily by employers prior to the launch of the MPF System to provide retirement benefits for their employees. Since ORSO schemes are not mandatory, scheme rules and provisions are drawn up by individual employers. Therefore, you’d have to refer to the related rules and provisions for any individual scheme.
Get Personalised Pension Advice
Additional Information Resources
Additional information resources are available by clicking on the links below:
You can also view information related to your particular stage of life: