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"The MPF was set up in a way that was employer based and it let 250,000 employers determine the providers in order to eliminate administrative burdens. To let all 2.4 million employees freely choose their providers and make it so they could transfer at any time would effectively change the whole structure of the MPF into an employee scheme."
Diana Chan Tong Chee-ching,
Mandatory Provident Fund Schemes Authority
Will someone please explain a great mystery to me? Why is it that bureaucracies set up to serve the general public so often take the side of special interest groups against the general public?
It happens round the world. Bureaucrats put in charge of food safety routinely side with the food industry against consumers. Bureaucrats put in charge of bank supervision routinely support bail-outs of private banks with public funds. The list is exhaustive.
Prominent on the list is the MPF authority. It condones pilfering of retirement funds by fund managers appointed to invest the money. The scheme was set up so these fund managers could charge scandalously high fees. The bureaucrats appointed to supervise them let them do it.
Why? They are not bribed, I'm sure. I think perhaps the reason is just straightforward pigheadedness. But it amazes me all the same.
Take the latest pronouncements by Ms Chan on the so-called Employee Choice Arrangement, which makes a mockery of the word choice. It allows employees to pick their own fund managers for their 5 per cent contributions to the scheme but it deliberately makes this so difficult that almost all workers will leave their retirement savings with the managers picked by their employers.
And as Ms Chan makes perfectly clear in the quote above, this was the intention. She does not want to make the change to employee choice. The "reform" was pure hypocrisy.
What Ms Chan pleads is administrative burden. If every employee can pick a different manager, it will be such a headache, you know, to have to send a different sum of money for each employee to each one of hundreds of individual managers every month.
For starters, no headache. There are only 40 registered MPF schemes and I imagine that 10 of them account for 98 per cent of the business. I can't be sure of the figures, however, as the MPF is also, shall we say, a little hesitant about transparency.
If, for instance, you want to know whether someone is a registered MPF intermediary, you must take HK$200 in cash to an MPF office, which will get you a certified copy of one entry on the register. If you got the wrong entry, try again. Front up another HK$200.
But Ms Chan obviously lives further in the past than most bureaucrats do. She has forgotten about computers.
What you do in the 21st century is set up the system so that at the end of every month it allocates contributions to up to 40 schemes, but probably no more than five. You then transmit this to the bank as an autopay instruction. It might take five nanoseconds, maybe six.
Every corporate accounts office regularly makes many more payments than this and with more paperwork and checking involved.
Government itself regularly sorts out millions of green, pink, and white forms. It's a government specialty. Ms Chan ought to know.
In fact, it makes things administratively easier. Under the present system an employee gets a new MPF account every time that he or she goes to a different job. Talk about headache. With real employee choice, he or she carries one account from employer to employer.
I just don't get it. Why does she side against us with the big fund managers? Will someone enlighten me, please?