Hong Kong: Hong Kong Government Publishes Proposed Amendments To The Occupational Retirement Schemes Ordinance (ORSO)

Last Updated: 30 April 2019
Article by Duncan A.W. Abate
Most Read Contributor in Hong Kong, September 2019

On 4 April 2019 the Hong Kong government published the long-awaited Occupational Retirement Schemes (Amendment) Bill 2019. This Bill is designed to:

  • ensure that retirement schemes which are registered or exempted under ORSO are "employment-based" (thereby outlawing certain purely investment-based products which have sprung up since ORSO commenced in the mid 90s)
  • grant the MPF Authority (MPFA) increased powers and discretion to investigate, approve or reject applications for registration, and
  • limit the circumstances in which retirement schemes can, in the future, apply for exemption under ORSO

These anticipated changes have been previously considered in our earlier alerts of:

Hong Kong's Mandatory Provident Fund Schemes Authority proposed new changes to the Occupational Retirement Schemes Ordinance, 19 June 2018

MPFA Launches Consultation to Overhaul Hong Kong Retirement Schemes Regime, 14 December 2017

This alert is not a review of the minutiae of the draft legislation (that would be staggeringly dull). Instead it is intended to give a flavour of the more important consequences of the legislation, and some of the concerns arising from the changes.

  1. Requiring all registered or exempted ORSO schemes to be "employment-related"

    This is the most fundamental, and intrusive, change to the Hong Kong retirement schemes regulatory regime. It will require the employer of every single one of the over-4,000 ORSO registered or exempted schemes to confirm annually that each scheme satisfies the "employment-related criterion". 

    A scheme satisfies the "employment-related criterion" if, in simple terms:

    • the only persons who are members of the scheme are employees (or former employees) of the employer, or employees of a former employer in respect of which a transfer has been made to the scheme, and
    • no other types of person (i.e., non-employees) are permitted to become members of the scheme

    The current draft of the Bill contains unusual provisions deeming "full-time" independent contractors to be "employees". Precisely how this is intended to work (or, indeed, why it is even in the legislation) will no doubt be explained in due course.

    An unexpected consequence of the proposed legislative changes is a material narrowing of the definition of "occupational retirement scheme" in ORSO by excluding from such definition any scheme or arrangement which does not limit membership to, in essence, "employees". Whilst this means that any scheme or arrangement which is open to any non-"employee" cannot be registered or exempted under ORSO, it also means that it will not be unlawful under section 3 of ORSO to contribute to or administer such a scheme. It is unclear whether this was the intention of the government. If it was, and so if this drafting is adopted, then it is possible that this may give rise to a new class of arrangement which is non-registered, non-exempt retirement schemes which cannot provide tax efficient benefits, but which are broadly unregulated.

    Comment: The essence of this change is well intentioned and should be relatively easy for employers to embrace (other than, of course, the schemes which are not employment-related!). It will require each of the 4,000 schemes in existence to be considered in order to ensure that the membership rule is sufficiently tight so as to exclude "non-employees". We do have a slight concern that there may be overseas schemes that are currently exempt under ORSO and may have standard membership clauses which do not expressly exclude non-employees. If this is the case then this could result in major restructuring arrangements for such schemes, their employers and the impacted employees.
  2. Increasing the investigation powers of the MPFA

    The Authority is seeking powers of investigation which are broadly aligned with those provided to other regulatory authorities in Hong Kong. 

    Comment: This change should not be a cause of any particular concern.
  3. Limiting the circumstances in which a future retirement scheme can be exempted under ORSO
    This change has been the subject of substantial discussion over the last year or so. It is also the primary topic of the two previous alerts from us referred to above. This change will materially narrow the circumstances in which a retirement scheme can obtain an ORSO exemption certificate in the future. The principal concern is that it is not at all uncommon for an international business looking to set up in Hong Kong (or send globally mobile international executives to Hong Kong) to wish to employ executives in Hong Kong who are members of an overseas retirement scheme (a "Home Country Scheme"). In order to avoid committing an offence under ORSO the employer must obtain an exemption certificate for the Home Country Scheme.  Currently there is a clear and obvious route to enable the Home Country Scheme to obtain an exemption certificate (the "no more than 10 percent or 50 members being Hong Kong permanent identity cardholders" route). The proposed changes will result in this clear and obvious route being removed in its entirety. This will mean that the ONLY way in which the Home Country Scheme can obtain an exemption certificate is by applying under the (very rarely used) section 7(4)(a) ORSO. This section enables the MPFA to grant an exemption certificate where the applicant scheme is "registered or approved by a regulatory authority outside Hong Kong performing functions which are generally analogous to those of the [MPFA]" (the "analogous authority exemption").  Comment: The MPFA has historically failed to provide any guidance as to which "regulatory authorities outside Hong Kong" satisfy the criteria of providing analogous functions. Notwithstanding numerous requests and despite the hugely increased importance of this analogous authority exemption, the MPFA continues to refuse even to commit to providing information to the retirement scheme industry of which overseas authorities it considers satisfy the condition of "performing functions which are generally analogous" to those of the MPFA.  This refusal to provide such information is a cause of concern. Either the MPFA is refusing to explain its position due to a desire to keep this exemption option very narrow (which would be a material issue for employers, and lawmakers, to consider when debating the impact of this legislation on Hong Kong) or the MPFA is unaware of the powers and functions being undertaken by its fellow regulators generally, which raises a separate set of concerns!  In any case, we would strongly encourage the MPFA to clarify this important issue, and for lawmakers to insist on a disclosure by the MPFA of the manner in which it intends to apply the analogous authority exemption.


When it gets to the stage of commenting on the drafting of the Bill then much of the "devil" will almost inevitably be in the "detail". Certainly most of the changes set out in the Bill were expected. That does not, however, mean that the implementation of the changes or, indeed, the impact of the changes is going to be seamless or painless. There will be pain and there will be disruption. The amount of pain and the amount of disruption can be minimised by transparency from the regulators who will oversee these changes, and by continued constructive dialogue with the industry as a whole. Many of these changes will be felt hardest by global employers who have operations in Hong Kong. If the new legislation is introduced in a clumsy or heavy-handed manner then this will impact Hong Kong's reputation globally.

Visit us at www.mayerbrownjsm.com

Mayer Brown is a global legal services organization comprising legal practices that are separate entities (the Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2019. The Mayer Brown Practices. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions