THE long-awaited Mandatory Provident Fund (MPF) scheme will have to wait even longer, with the Legislative Council failing to find a spot to debate it in its tight schedule in the run-up to the handover. The incoming provisional legislature is unlikely to take it up any time soon, given its priorities. Experts say the most optimistic date is the end of next year. Stephen Pang of the MPF Office said the MPF Schemes Ordinance, enacted in August 1995, had to be supplemented by subsidiary legislation setting out detailed regulations and rules, which had been drafted, before it could come into effect. 'The details of the proposed system have been discussed with the Legco sub-committee during the past seven months and members have made useful comments to improve the scheme,' he said. Mr Pang also assured investors the scheme would not shackle movement of assets. He explained that, although the investment standards for the MPF assets would not prescribe a specific percentage for Hong Kong dollar-denominated funds, trustees were required to ensure the MPF assets' foreign currency exposure did not exceed 70 per cent. 'Hedging the currency risk of foreign currency assets into Hong Kong dollars is allowed for the purposes of determining compliance with this limit. In other words, a scheme can comply with this requirement by investing in all sorts of currencies, as long as 30 per cent is hedged back to Hong Kong dollars at all times.' As regards conflict of interest, Mr Pang said: 'Schemes registered under the MPF Schemes Ordinance and the Occupation Retirement Schemes Ordinance (ORSO) are both legal. When the MPF is introduced, existing ORSO schemes may continue to provide supplementary benefits to employees.' The fund industry, however, is not pleased with the pace of the legislation or some of the intended clauses. Stewart Aldcroft, marketing and sales director of Templeton Franklin Services (Asia), said Hong Kong was one of the few countries in the world that did not provide a fiscal stimulus to encourage savings by individuals. 'In the US and Europe, the governments provide taxation advantages to save money for retirement. Also, in the US, tax savings can be achieved from the Personal Equity Plan. There is a similar scheme in France. And this has been an ideal way for the unit trust industry to grow in these countries. 'Hong Kong does not have this but, with the introduction of the MPF, everyone in the MPF would also be in unit trusts. 'Unit trust companies, including Templeton, are not very happy about the way in which the MPF regulations are being finalised,' Mr Aldcroft said. 'There are an increasing number of clauses or changes being inserted at the request of various members of the Legco sub-committee.' This was creating a position where the MPF schemes would be difficult to establish. In the end it would create a lack of competition, which was not the Government's intention. 'For example, there is a requirement that every scheme set up, in effect, have a guaranteed product available. That's not a reasonable request. We don't offer guaranteed funds as a company, so why should we be forced to create guaranteed funds to enter the MPF environment?' Mr Aldcroft said the fact no existing unit trust authorised in Hong Kong would be allowed to be used by the MPF seemed an unnecessary waste of resources. 'A lot of this has to do with the lack of consultation at key decision times by the MPF Office with industry leaders. Yes, they consulted but not until after they had made decisions on what they wanted to do. In effect, they were telling us what to do, not asking us what they should do.'