The Mandatory Provident Fund (MPF) will bring more than a million workers into a retirement-savings scheme for the first time. It will also have an impact on more than 900,000 people now covered by the Occupational Retirement Schemes Ordinance (Orso). Orso-scheme members may wonder whether they must join new MPF schemes and what must be done if they choose to retain their existing schemes. Orso schemes may co-exist with new MPF schemes. The MPF legislation has set out detailed arrangements for the interface of Orso schemes. Existing Orso schemes may be exempted from MPF requirements if certain exemption criteria are met. The legislation prescribes clear criteria for the exemption of two main types of Orso schemes, namely Orso-exempted and Orso-registered schemes. An Orso-exempted scheme means: (a) An exempted scheme under Orso; or (b) An occupational-retirement scheme operated by a foreign government or an agency or undertaking of or by such a government which is not operated for the purpose of gain. Orso-exempted schemes must meet the following exemption criteria in order to be eligible for MPF exemption: (a) Both existing members and new eligible employees are given a right to opt between the existing scheme and MPF coverage, unless membership of the Orso-exempted scheme is compelled by the law of the domicile of the scheme; (b) The relevant employer is required to disclose relevant information to the existing members and eligible new employees to enable them to make the choice; and (c) The relevant employer is required to either set up or participate in an MPF scheme to cover those employees who opt for MPF coverage. For the purpose of exemption from MPF requirements, an Orso-registered scheme must be a 'relevant Orso registered scheme' in the sense that: (a) Is governed by a trust; (b) Provides benefits payable on termination of service, death, disability, retirement or winding up of the scheme; (c) Is established on or before 15 October 1995; and (d) Has applied for exemption/registration under the Orso on or before 15 January 1996. If a company's Orso scheme meets the exemption criteria and to which an exemption certificate has been granted by the Mandatory Provident Fund Schemes Authority (MPFA), as long as the existing members have elected to remain in the MPF-exempted Orso scheme, their existing and future benefits in the scheme will not be affected. The benefits will not be subject to the full and immediate vesting and preservation requirements of MPF schemes. However, if a new employee who is eligible to join an MPF-exempted Orso scheme opts to join the scheme, his or her accrued benefits under the scheme up to the prescribed 'minimum MPF benefits' will be subject to the preservation and portability requirements. His or her accrued benefits in excess of the 'minimum MPF benefits' can be paid out in a cash lump sum upon termination of service. For existing members who opt to join an MPF scheme, their accrued rights should be retained in the relevant Orso scheme until they are entitled to receive the benefits from the scheme. They can receive all their benefits accrued under the Orso scheme in cash lump sums upon termination of service. However, the accrued rights of an opt-out member may be treated otherwise than in accordance with the above provisions if the member's consent has been obtained and it is allowed under the governing rules of the relevant scheme. Applications for MPF exemption may be submitted to the MPFA from January 3 onwards. The deadline for submission is May 3. Processing of applications is targeted to be completed by July 31. The applications will be processed and approved on a first-come-first-served basis. There are several options available to employers in respect of interface arrangements for their existing Orso schemes. (a) The relevant employer may continue to operate the Orso scheme as the core scheme and apply for MPF exemption. He has to either set up or participate in an MPF scheme to cover those employees who opt for MPF coverage. (b) The relevant employer may continue to operate the Orso scheme as a top-up scheme. All existing members and new employees will be enrolled into an MPF scheme. In this case, there is no need to apply for MPF exemption for the existing-Orso scheme. (c) Another option is to close the Orso scheme to new members while existing members will continue to accrue future benefits under the Orso scheme. The employer has to apply for exemption from MPF requirements in respect of the existing members. All new employees will be covered under an MPF scheme. (d) The relevant employer may gradually wind-down the scheme by closing the Orso scheme to new members and freeze existing members' scheme service. There is no need to apply for MPF exemption for the Orso scheme. All existing members and new employees will be covered under an MPF scheme. (e) The relevant employer may wind up the Orso scheme immediately by paying out all the liabilities or transfer all assets and liabilities into an MPF scheme as voluntary contributions. All existing members and new employees will be covered under an MPF scheme.