In preparing to meet the requirements of Hong Kong's mandatory pension scheme when it goes into effect at the end of next year, company managers will have to decide not only which service provider to hire but also which computer software to use in helping them calculate fund deductions. For most companies, upgrading their accounting and payroll software to handle the Mandatory Provident Fund should not prove difficult or expensive, experts say. Still, managers will need to make sure their in-house software is upgraded to become MPF-ready, or that their bank or insurance company provides the MPF components. Employers using payroll software should check with the software makers to see whether these companies would be issuing upgrades that could calculate MPF deductions, said Dennis Ng, North Asia managing director of United States-based Progress Software. 'If companies already have certain IT infrastructure, I don't think they would have a lot more to add,' he said. Software vendor SAP is among those with plans to add MPF functions to its payroll program R/3. Final details for MPF, under which employers will be required to contribute 5 per cent of salaries to pension funds and employees may contribute up to 5 per cent, will be released by early next year. Small companies with few employees could calculate deductions manually, Mr Ng said. For companies with more workers, software to automate the process could be helpful. Some software promises to do calculations for both the MPF funds and an existing voluntary scheme called Orso. Many MPF service providers - banks and insurance companies that are already beginning to market their wares - will be offering software to their clients. Companies such as Manulife are developing their own software, while others are signing licensing deals with software makers. Many software vendors are choosing not to directly sell their MPF software to companies in favour of licensing them to MPF service providers. They include Hong Kong-based Progressive Technology, US-based SunGard EBS and US-based Policy Management Systems Corporation. Using software from MPF service providers gave companies the benefit of having compatibility in case they wanted to send information electronically to the service providers, said W. K. Lai, project director at Progressive. If the software was used only to calculate fund contributions, synchronising with the service providers' software was not necessary. Businesses buying new payroll software should check to see it is capable of making MPF deductions. Software vendor Master Future Technology said its basic package included an MPF module that could be updated once the scheme's regulations were finalised. Progressive, which had taken technology supplied by Progress Software and added features that allowed accounts to be checked over the Internet or on the telephone, also planned to retail its payroll and MPF software directly to end-users, Mr Lai said. Most of the action in the MPF software market seems to be in licensing, with software makers demonstrating their systems to the insurance companies and banks that plan to provide services. SunGard has signed a deal with insurer AIA Pension & Trust, while Progressive has licensed its MPF-Pro software to Eagle Star Insurance, Pacific Century Insurance and Lippo. By offering the MPF-Pro software in conjunction with payroll software called Pay Easy, Progressive hopes to capture at least half of the service-provider market. The biggest challenge facing Hong Kong companies would be understanding what the requirements and deadlines were, said John Barr, a partner at PricewaterhouseCoopers in Hong Kong. His clients had been asking for more general advice on MPF rather than about software needs. Master Future Technology's payroll package, called Staffman 2.8, sells for about $20,000. Progressive has not yet set a retail price for its Pay Easy software, which is capable of making MPF deductions, though Mr Lai said it probably would be less than $2,000.