The Mandatory Provident Fund Schemes Authority (MPFA) in Hong Kong has introduced a new prescribed savings rate (PSR) formula for Mandatory Provident Funds (MPF).
The formula applies to schemes trustees collecting fees and charges on capital preservation (CP) funds for a particular month. The new formula takes effect following the deregulation of savings deposit rates last month. An MPFA spokesman said that from July 2001, the PSR will be the simple average of the interest rates offered by the three note-issuing banks in Hong Kong on a Hong Kong dollar savings account with a deposit amount of $120,000. The PSR is 2.25% for the first two days of July and 1.9167% for the rest of the month.
No fees or charges can be deducted from the CP funds in any month unless it achieves a net return for that month of over and above the return calculated based on the PSRs prescribed by the MPFA. Each month, the PSRs for the previous month are announced in the print media, as well as on the MPFA website.
Relevant guidelines on the PSR calculation were amended in June after consulting the MPF industry.
It is a statutory requirement to provide for CP funds in every MPF scheme.
By Janet Du Chenne
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