HSBC is offering an array of services to assist its 4,600 existing pension clients cope with the MPF, according to HSBC Provident Fund Services chief executive, David Humphreys. At present, HSBC is the largest pension provider in Hong Kong, with a market share of about 25 per cent of the total 19,000 retirement plans set up under Occupational Retirement Schemes Ordinance (Orso). The large number of clients means HSBC needs to allocate more resources and staff than the other service providers to assist clients handle the interface from Orso plans to MPF schemes, Mr Humphreys said. Under the MPF ordinance, all 19,000 Orso schemes in Hong Kong were required to apply to the Mandatory Provident Fund Schemes Authority for exemption by the May 3 deadline should they want to maintain their Orso plansbeyond December. By the deadline, the MPFA had received 7,107 exemption applications for Orso schemes covering 640,000 employees. Only the 13,000 Orso schemes set up before October 15, 1995, were able to apply for exemption. Mr Humphreys said among the HSBC clients, there were 2,494 Orso clients who applied for exemptions, representing about 89 per cent of 2,800 schemes qualified to apply for exemption. For the 2,494 Orso schemes which applied for exemption from the MPF, Mr Humphreys said HSBC would help employees of these companies choose between the Orso and the MPF. 'Under MPF rules, employers who applied for Orso exemption must allow their staff to have a one-off chance to choose to stay with the Orso or to join the MPF,' he said. This choice must be made before mid-October. If no one chooses the MPF, a company can only run the Orso scheme. But even if one employee were to opt out of an Orso scheme, a company has to set up an MPF scheme for that person. 'Employers have decided whether to apply for exemption to keep their Orso schemes running,' he said. 'Now it is the employees' turn to make a decision to join the MPF or to stay with the Orso. HSBC will be ready to assist employees to make that decision.' Employees enrolled in the 2,100 HSBC-managed Orso schemes which had not sought exemptions would be compelled to choose an MPF scheme, Mr Humphreys said. These 2,100 companies had three choices with regard to the Orso schemes, he said. The first option would be to wind up the Orso plan and transfer the assets to an MPF scheme. The second choice would be to end the Orso scheme and distribute the assets to the employees. Mr Humphreys reminds employers who choose this option that there are tax implications for their workers. Employees who collect their benefits while still employed are required to pay salaries tax. The final option would be to maintain the Orso scheme as a top-up to the MPF schemes. Employees can collect the top- up portion upon leaving their jobs, but can only claim the MPF portion after retirement. Mr Humphreys recommends this option for companies which intend to provide additional pension benefits to staff.