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Enoch Yiu

The Government would prefer - against the wishes of provisional legislators - not to tighten investment restrictions on the Mandatory Provident Fund, according to MPF office assistant director Raymond Tam Wai-man.

 Many legislators demanded the Government offer more concessions if MPF subsidiary legislation is to be passed on April 1 and the scheme is to be launched next year.

 They called for an increase in the amount of Hong Kong dollar assets in the scheme from 30 per cent to 50 per cent and for a cap on the fund's investment in the stock market at 50 per cent.

 Mr Tam said the Government was hoping to maintain the current investment guidelines and would lobby legislators next Wednesday.

 'The Government will need to get the legislature's support,' he said. 'However, we also need to consider that more investment restrictions may lead to lower returns on employee's contributions.

 'The restriction on equities investment would seriously reduce the MPF's investment returns, while the increase in Hong Kong dollar assets would avoid the fund diversifying investment risks in different markets.'  He said the Government had agreed with legislators' demands to introduce the capital preservation product (CPP) for MPF schemes.

 This product will only invest in low-risk products such as bank deposits or government bonds.

 'The CPP already provides a prudent investment option within the MPF. There is no point increasing the investment restrictions on other MPF investment options.'  Hong Kong Actuarial Society MPF committee chairman Yam Chi-fai said more risks would be posed to employees' contributions if half of MPF assets had to be placed in Hong Kong.

 'The Hong Kong debt market has not been fully developed.

 'The restrictions would force fund managers to put more money in the Hong Kong stock market which is very volatile.'  He said: 'The 50 per cent restriction on equities investment is unacceptable as that would abuse the employees' right to choose higher return investment options.' 



Government eager to keep level of MPF investment