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Employees unhappy with returns on their Mandatory Provident Fund have the opportunity from next month to choose their provider. But the system is still far from perfect.
The MPF is aimed at providing retirement protection for the city's 2.35 million workers but the system from day one has been structured in a way that is employer driven instead of employee driven.
Established in 2000, the fund requires employers and employees to each pay 5 per cent of the worker's salary - up to HK$2,500 a month - to an MPF provider such as a bank or fund company.
The system previously allowed employers to choose the provider for all their staff while the employees could choose only how to allocate their contribution to different funds. The MPF is the employees' money and it raises the question of why they were not given full control.
This means no matter how badly the service is provided, the staff have no say. This may explain why many providers which performed poorly could still charge high fees.
When you don't need to worry about losing your clients, there is no incentive to improve performance or services. The employees have to pay every month anyway.
Bosses may choose as their workers' MPF provider their bankers or the insurance companies that provide the cover for the company. This is good for the boss as such cross-selling relationships make their bankers happy to offer cheaper loans.
Now the government has finally changed the law to allow workers to transfer their contributions to a new provider once a year, free of charge.
It puts more pressure on the providers to improve services or cut fees to compete for employees to join or to prevent them from leaving.
However, it is still not good enough. Even after the change, employees can transfer only their accumulated contributions to the new provider but the employer's contributions stay with the original provider.
Also, the new contributions from both the employer and the employee for the next year will continue to be paid to the old providers. Only at the end of the year will employees be able to transfer all of their contributions to the new provider.
Another common complaint about the MPF is that the boss can also use the MPF contribution to offset severance payments or long-service payments, which is unfair to employees as their retirement benefits are eroded for the benefit of their boss.
This is why many employees are unhappy about the MPF. For it to be successful, employees need to have more control.