[c1000]

OK, I'm faced with this horrible choice. Basically, with MPF my employer will contribute $1000/month. With ORSO, they contribute 10%-12.5% of my salary (depending on my own contribution), which is substantially more than $1000/month. However, I'm only entitled to 20% of the employer's contribution after 2 years, which staggers up to 100% after 10 years. If I leave in less than 2 years, I get nothing.

I figure that break-even between MPF and ORSO is around 3-4 years, which is quite a long time to spend in a high pressure job. Obviously, ORSO is much better in the long-run, while MPF is a sure thing.

My questions - are employees typically entitled to the employer's contribution if they are terminated in less than 2 years? Can you usually negotiate with a prospective employer for compensation for loss of the ORSO pension? Anything else I should know?

[KnowItAll]

>> employer's contribution

Assuming you mean the voluntary contribution.

Depends on the vesting period negotiated with the employer.

[dreamlucca]

Most people in HK are woefully ignorant of the benefits of both the MPF and ORSO. The HK government has done a poor job of educating the public as to their benefits and have failed to inflation adjust the MPF to allow for inflation. Both schemes are extremely valuable, in order to understand them properly, best to seek independent financial advice. Julian Galvin at Tyche Group is someone worth talking to.

[tylney]

Absolutely concur with this last post.

Both MPF and expsecially ORSO offer a number of key benefits which are not available with the individual products that most people in Hong Kong tend to use to supplement their retirement income.

Both are extremely cost effective and ORSO especially as unlimited investment option capability. Poor communication is the reason why most Hong Kongers purchase inferior, expensive supplementary insurance products from IFA's to their financial detriment.

[dreamlucca]

Agree with the last post regarding the purchase of inferior supplementary products, why do people do this?

When it comes to addressing many areas of their own financial needs,the typical Hong Kong resident will not address such issues simply because they do not possess the required expertise, the time or indeed the inclination for a topic so vast and let’s face it, second to virtually all other chores in terms of excitement;sitting down to review your financial position comes a distant second to such activities as cleaning the car, sewing name tags into the kids uniform or framing that print you bought in Thailand.

The Government has not done enough in terms of educating the people of Hong Kong regarding the benefits of the MPF and ORSO schemes, so finding someone who is able to review both independently and impartially for you is a problem in itself, in an industry largely consisting of tied company representatives and brokers holding very restrictive licenses (the majority do not hold investment licenses)

Finding a reputable firm who are fully licensed and authorised can be like looking for the proverbial needle in a haystack. It is no wonder that so many fall so far short of gaining the maximum potential from Hong Kong’s unique and beneficial financial environment, which is well regulated, highly diversified and tax-free.

Thanks to the ingrained attitude of laissé-faire; HK provides access to products and strategies other markets can only dream of, unfortunately for those who have ventured out, all too often the experience has only confirmed their worst fears. It is such a wasted opportunity when the fear of getting financial decisions wrong prevents you from taking any action and leaving you with the task of justifying why you saw ‘slightly wrong’ (procrastination) as being a good outcome.


In brief an ORS established in Hong Kong is set up under a different set of criteria to those set up in other highly taxed jurisdictions where regulators determine what assets you may hold in a pension fund and also demand you report this to the Revenue because of their inherent 'tax benefits'

Hong Kong takes the approach that a prudent business person can determine for themselves what is best to hold in their own pension plan. There are limitations on this, the investment cant be depreciable, highly illiquid or have an inherent liability on it - instead of the print from Thailand surely a Picasso or two would be deemed a good investment by any prudent business person?

[mengfei]

i heard from a friend that HK will change the mechanics of how MPF works since most of the money is in the bank & while they are using our money we cannot get any until a certain age & with a volatile financial market nowadays we might be left with nothing which defeats the purpose of MPF, any news about this?

[tylney]

Originally Posted by mengfei

i heard from a friend that HK will change the mechanics of how MPF works since most of the money is in the bank & while they are using our money we cannot get any until a certain age & with a volatile financial market nowadays we might be left with nothing which defeats the purpose of MPF, any news about this?

To be honest quite the opposite is true. The fact is that whilst your other investments and cash deposits that you hold at the bank are possibly affected and may be in danger by this financial turmoil, your MPF & ORSO money is totally safe as it is held in trust in a segragated account that neither the insurance company, investment company the governement, the FED or anyone else apart from you can touch.

[mengfei]

....but for the MPF the employee places his money on some sort of an investment like Asia Equity Fund or Hang Seng Tracker Fund so when the whole market crashes those investments go along with it.

Even with Guaranteed Fund or Balance fund you still loose out