Glossary

 
 
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Accrued Benefits

The financial benefits from a retirement scheme that an employee is entitled to. These benefits are the contributions that have been made by the employee and employer, together with any investment gains or losses made on the contributions, and adjusted for any vesting rules regarding the employer's contribution.

See also “Contribution” and “Vesting”

Administrator

One of four key roles in an MPF scheme. The administrator is in charge of record-keeping, including tracking member details, collecting and processing contributions, and processing member benefit statements. Often the trustee and the administrator are the same company, but sometimes the role is delegated to a third-party.

See also “Custodian”, “Investment Manager” and “Trustee”.

Annual Performance

The gain or loss generated by a fund for a given calendar year.

Annualised Performance

Not to be confused with annual performance. The annualised performance shows how well an investment has performed on average each year during a multi-year period.

Annualised Returns

See also “Annualised Performance”.

Asset Allocation

The distribution of investment capital among various asset classes according to an investment strategy. Asset allocation allows an investor or fund to control investment risk and investment exposure in different financial markets or economic sectors to achieve certain investment objectives. An investor with low risk tolerance, for example, may choose asset allocation with a greater portion of bonds and short-term debt instruments.

See also “Bonds”, “Equities” and “Short-term Debt Instruments”.

Asset Allocation by Fund Manager

The breakdown of a portfolio’s investments based on the underlying fund managers.

Asset Class

Basic categories of investments, which include equities, bonds, short-term debt instruments and cash. Each asset class has unique characteristics that influence its potential return and risk level.

See also “Bonds”, “Equities” and “Short-term Debt Instruments”.

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Benchmark Asset Allocation

The standard asset allocation of an investment fund which serves to indicate the long-term asset allocation strategy of the fund.

See also “Asset Allocation” and “Fund”.

Bonds

An asset class that represents a loan by an investor to a company or government. The borrower, known as the bond issuer, pays regular interest over an agreed period of time before returning the full loan amount. Bonds can be bought and sold during their lifetime, though their price can fluctuate depending on interest rate expectations. They are generally considered less volatile and offer less growth potential than equities.

See also “Asset Class”, “Equities” and “Short-term Debt Instruments”.

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Compensation Fund

A fund established by the MPFA to protect members of MPF schemes who have lost their accrued benefits due to fraud or illegal conduct committed by the approved trustees or other persons concerned with the administration of those schemes.
The approved trustee must pay 0.03% of the total scheme's net asset value to the MPFA per year as a compensation fund levy. In practice, it is likely that this levy will be included in the administrative fees paid by members periodically, and then paid in bulk to the MPFA.

See also “MPFA or Mandatory Provident Fund Schemes Authority”, “MPF Scheme” and “Trustee”.

Constituent Fund

One of the funds offered under a registered MPF scheme. An MPF scheme may have three constituent funds for members: an equity fund, a bond fund, and a conservative fund. All member and employer contributions will be paid into the selected constituent fund.

See also “Contribution”, “Fund”, “MPF Conservative Fund” and “MPF Scheme”.

Contribution

Payments made to a retirement scheme to the credit of a member’s account.

MPF
MPF contributions may consist of mandatory and voluntary contributions by the employer and the employee. Contributions must be made 10 calendar days after the last day of the normal contribution period (usually each calendar month).

ORSO
ORSO scheme contributions are subject to the applicable scheme rules.

See also “Mandatory Contribution”, “MPF Scheme” and “Voluntary Contributions”.

Cumulative Performance

The total gain or loss generated by a fund over a specified period of time, such as the year to date, last three months, last calendar year or since launch.

See also “Annualised Performance”, “Annual Performance”, “Fund Performance” and “Net Asset Value (NAV)”.

Cumulative Returns

See also “Cumulative Performance”.

Custodian

One of four key roles in an MPF scheme. The custodian has custody of the assets of a retirement scheme. Often, the custodian is the same company or individual as the trustee.

See also “MPFA or Mandatory Provident Fund Schemes Authority”, “MPF Scheme” and “Trustee”.

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Defined Benefit

Defined Benefit represents one of two ways to calculate members' benefits in a scheme, the other being defined contribution. The amount of benefit receivable is based on a formula, which may depend on factors such as years of service, salary history or staff grade.

See also “Defined Contribution” and “ORSO or Occupational Retirement Schemes Ordinance”.

Defined Contribution

Defined Contribution is one of two ways to calculate members' benefits in a scheme, the other being defined benefit. The benefit is specified in terms of contributions paid, plus any investment return or interest paid. MPF schemes are defined contribution plans by definition, ORSO schemes may be defined benefit, defined contribution or a combination of both.

See also “Defined Benefit”, “MPF Scheme” and “ORSO or Occupational Retirement Schemes Ordinance”.

Dollar Cost Averaging

Investing a fixed dollar amount into a fund according to a regular schedule regardless of the price. This practice is adopted by retirement schemes, with investors usually making regular monthly contributions. Dollar cost averaging attempts to lessen the investment risk associated with market timing by spreading out investments over an extended period of time.

See also “Dollar Cost Averaging Return” and “Market Timing”.

Dollar Cost Averaging Return

The Dollar Cost Averaging Return available for most of our retirement funds with at least a three-year track record illustrates the rate of return that may be achieved through making regular contributions over a certain period of time. The figures are calculated by Gadbury Group Limited with the assumption that monthly contributions remain constant over time and made on the last day of each month.

See also “Dollar Cost Averaging”.

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Equities

An asset class also known as stocks or shares and which represents ownership in a company. Equities are considered more risky than other asset classes, as they tend to react quickly to economic news and geopolitical events. But they have historically performed better than bonds and money market instruments.

See also “Asset Class”, “Bonds” and “Short-term Debt Instruments”.

Exempt Person

Certain people are exempt from having to participate in an MPF scheme. These include:
• Domestic employees
• Self-employed hawkers
• People covered by statutory pension or provident fund schemes, such as civil servants and subsidised or grant school teachers
• Members of occupational retirement schemes granted MPF exemption certificates
• People from overseas who enter Hong Kong for employment for less than 13 months, or who are covered by overseas retirement schemes
• Employees of the European Union Office of the European Commission in Hong Kong

See also “MPF-Exempted ORSO Scheme”, “MPF Scheme” and “Relevant Employee”.

Explanatory Memorandum

 
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Fees

The costs of managing and operating a fund or retirement scheme charged to investors. These fees may include:
• investment management
• trustee and record-keeping

• custodian
• other fees subject to the terms and conditions in the offering documents

MPF
MPF master trusts use a bundled structure and deduct fees from the funds’ assets. Additional fees with respect to MPF are:
• levy to the MPFA
• compensation fund levy

ORSO
ORSO schemes that do not use a bundled approach may charge fees separately.

See also “Compensation Fund”, “Custodian”, “Master Trust Scheme”, “MPFA or Mandatory Provident Fund Schemes Authority” and “Trustee”.

Fund

A pool of money set aside for a purpose, usually to generate a return through investments. In the case of retirement fund, the assets are invested for retirement as defined in the fund's offering document. In a common retirement fund arrangement, sub-funds with different investment objectives may be chosen by the members.

See also “Constituent Fund”, “Member Choice” and “Offering Document”.

Fund Allocation by Asset Class

The breakdown of a portfolio’s investments based on asset classes, such as equities, bonds and cash.

Fund Expense Ratio

The total expenses charged by a fund expressed as a percentage of the fund's net asset value. Such costs may include transaction costs, auditor fees, fund management fees, trustee fees, custody fees, accounting charges, printing costs and other operational expenses.

Fund of Funds

A fund, which invests in other investment funds. The main advantage of such a fund is greater diversification.

Fund Performance

The gain or loss generated by a fund as measured by the percentage change in the fund’s net asset value. Fund performance can be measured in a number of ways, including on an annual basis, annualised basis and cumulative basis.

See also “Annualised Performance”, “Cumulative Performance” and “Net Asset Value (NAV)”.

Fund Risk Rating

Risk ratings are 1 = Low risk, 2 = Low to Medium risk, 3 = Medium risk, 4 = Medium to High risk, 5 = High risk.
* Funds with track records of less than 3 years use their respective Morningstar Category Risk rating as proxies until the funds accumulate a track record of 3 years.
The fund risk rating is sourced from a methodology developed for Fidelity by Morningstar (Asia) Limited ("Morningstar").The fund risk rating is provided to investor(s) for reference purposes only.
For more details on Fund risk ratings and its calculation methodology, please refer to the overview.

Fund Supermarket

A fund distribution platform that offers a range of unit trusts from different fund houses. Investors have the convenience of being able to mix and match investments in their portfolio using different manager's funds with one supplier and receive all the performance statements in a single report. Some fund supermarkets bundle selected funds together as packages based on the investor’s risk profile. For example, “stable”, “balanced” or “growth” portfolios comprise different fixed proportions of equity, bond and money market funds.

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Geographical/Currency Breakdown

The breakdown of a portfolio’s investments by country or currency, updated on a quarterly basis during the calendar year.

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Inception Date

The date on which a fund was launched.

Industry Breakdown

The breakdown of a portfolio’s investments by industry group, updated on a quarterly basis during the calendar year.

Inflation Risk

The risk that an investment's return may not keep pace with the rate of inflation. Investing too conservatively may increase inflation risk, as the investment options may grow below the rate of inflation, resulting in a loss of purchasing power.

See also “Investment Risk”, “Purchasing Power” and “Risk”.

Investment Manager

One of four key roles in an MPF scheme. The investment manager is responsible for managing the scheme’s assets to a given set of objectives. Under the MPF system, the investment manager must be a company incorporated in Hong Kong, must be independent of the trustee and custodian, and meet certain requirements in terms of SFC registration and minimum share capital and assets.

See also “Custodian”, “MPF Scheme”, “SFC or Securities and Futures Commission” and “Trustee”.

Investment Risk

The risk that an investment's actual return will be lower than its expected return. Investment risk includes the possibility of an investment losing market value, and may be reduced through diversification.

See also “Risk”.

Investment Switching

The ability to choose and/or change which funds to invest in within a retirement scheme or individual savings account.

MPF
MPF schemes allow the following two types of fund switching:
• Re-direction: change the investment allocation of future contributions only
• Investment switch: change the investment allocation of existing assets only

ORSO
ORSO schemes with defined contribution may allow members to perform the following 2 types of fund switching on a regular basis:
• Re-direction: change the investment allocation of future contributions only
• Assets switch: change the investment allocation of existing assets only

Investor Choice

The choice of different investment options given to members of an MPF scheme. This is often also referred to as member choice, as members can choose which investment strategy best suits their own retirement goals.

See also “Investor Profile” and “Member Choice”.

Investor Education

Employees
Investor education is a resource for members of retirement schemes to understand, plan and execute an investment strategy that is suitable for a retirement goal. We provide investor education to our members on our web site.

Employers
Investor education should go beyond the basic understanding of asset classes and investing with the right asset mix. Fidelity's investor education and guidance is tailored to your employees' needs through targeted messages. This service is offered to MPF members. If you would like this arrangement for your ORSO employees, please contact your account manager.

Investor Profile

A profile that describes issues relating to how a person invests, such as marital status, age and attitude towards risk. Different people have different investment requirements, and so fit different investor profiles.
A person's risk appetite depends greatly on factors that affect their current and future assets and liabilities. Through an assessment of these factors, an investor profile can be generated to identify the risk level the individual may be prepared to take.

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Latest Fund Expenses Ratio

The total expenses charged by a fund expressed as a percentage of its net asset value.

Life Stages

The distinct phases of a person’s life. Life stages are usually based on age and life choices, such as starting a career, getting married, having children and retiring. As individuals move through different life stages, their retirement goals, spending patterns and risk tolerance and, therefore, their investment needs may change.

See also “Lifecycle Funds”.

Lifecycle Funds

Globally diversified investment funds that invest in a range of assets, including equities, bonds and short-term money market instruments. Lifecycle funds usually contain funds that range from conservative to aggressive to better suit investors at different life stages.

See also “Bonds”, “Equities”, “Fund”, “Life Stages” and “Short-term Debt Instruments”.

Lipper Leader Rating Systems

A system of ratings created by Lipper to guide investors and advisers in selecting funds best suited to their investment style and goals.

Long-Service Payment

A statutory payment under the Employment Ordinance. Benefits accrued from employer contributions can be used to offset Long-Service Payments.

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Manager Risk

The risk that one fund may underperform others in the same category due to performance of the fund’s portfolio manager. Like investment risk, manager risk may be reduced by investing in more than one of the same type of fund managed by different portfolio managers.

See also “Investment Risk” and “Risk”.

Mandatory Contribution

The amount of contributions that an employer and employee must make to the employee’s MPF account under the MPF system.
The amount to be paid is dependent on the employee's relevant income. Employers must pay a contribution of 5% of the relevant income to the employee's account up to a maximum of HKD1,500 per month.
Employees who earn over HKD7,100 per month must also contribute 5% of their relevant income, up to a maximum of HKD1,500 per month.

See also “Contribution” and “Relevant Income”.

Market Timing

Making investments based on predictions of future price movements in financial markets. As it is difficult or arguably impossible to predict future market movements consistently, market timing is an approach to investing that average investors are widely advised to avoid using.

See also “Dollar Cost Averaging”.

Master Trust Scheme

A registered MPF scheme open to employees of any employer, as well as to self-employed persons, and to people who used to be in a scheme as an employee and have chosen to leave their benefits in the scheme after leaving the employer.

See also “MPF Scheme”.

Member Choice

A feature in a defined contribution retirement scheme where members or employees have the ability to choose investment funds from a range of investment options.

See also “Defined Contribution” and “Investor Choice”.

Minimum MPF Benefit

The minimum amount of benefits from an MPF-exempted ORSO scheme that an employee must preserve when leaving the scheme. Any benefit in excess of the minimum MPF benefit can be paid to the employee under the normal ORSO scheme rules.
The minimum MPF benefit is the lesser of:
- the member's benefits accrued in the ORSO scheme since 1st December 2000 or their first date of employment whichever is later, and
- 1.2 x the final average monthly relevant income (maximum of HKD30,000) x years of post-MPF service

See also “MPF-Exempted ORSO Scheme”, “ORSO or Occupational Retirement Schemes Ordinance” and “Portability”.

Modified Duration

A measure of the sensitivity of a bond or fixed-income portfolio's price to interest rate changes. It follows the concept that interest rates and bond prices move in opposite directions. For example, if interest rates rise 1%, the price of a bond with five years’ duration of five years will generally fall by 5%.

MPF Conservative Fund

A low-risk investment fund which every MPF scheme must offer. The fund is essentially a money market fund, which invests only in Hong Kong dollar-denominated short-term bank deposits or high quality debt securities.

See also “Constituent Fund”, “Fund”, “MPF Scheme” and “Short-term Debt Instruments”.

MPF Employee Choice Arrangement

An arrangement providing employees with more flexibility to choose MPF schemes. Under the MPF Employee Choice Arrangement, employees will be allowed to, once a year, transfer their portion of mandatory contributions made under their current employers to an MPF scheme of their own choosing.

See also “MPF Scheme”.

MPF Scheme

A provident fund scheme registered under the MPF system. This may be an employer-sponsored scheme, an industry scheme or a master trust scheme.

See also “Master Trust Scheme”.

MPF-Exempted ORSO Scheme

An ORSO scheme that has been exempted under MPF requirements. Members of an MPF-exempted ORSO scheme may be exempt from making contributions to an MPF scheme.

See also “ORSO or Occupational Retirement Schemes Ordinance” and “Portability”.

MPFA or Mandatory Provident Fund Schemes Authority

The regulatory authority established to regulate the operation of the MPF system in Hong Kong.

See also “MPF Scheme”.

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Net Asset Value (NAV)

The total value of the fund's portfolio minus liabilities.

Net Asset Value Per Unit

The value of one unit or share of a fund. This is calculated by dividing the net asset value of the fund by the total number of units or shares outstanding.

See also “Net Asset Value (NAV)” and “Unit NAV”.

Normal Retirement Age

Under the MPF system, the normal retirement age is 65 years. An MPF member's mandatory contributions and an ORSO member's required minimum MPF benefits may not be withdrawn under normal circumstances until they reach the normal retirement age.

See also “Mandatory Contribution” and “Payment of Benefit”.

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Occupational Retirement Scheme

This usually refers to a scheme, set up under trust or an insurance arrangement, that provides benefits, such as pensions, allowances, gratuities or other payments, which are payable on death, permanent disability, retirement or termination of service. It excludes insurance contracts that are solely for the provision of death or disability benefits.

See also “ORSO or Occupational Retirement Schemes Ordinance”.

Offering Document

A legal document stating the objectives, risks and operations of an investment product. It serves to provide investors and prospective investors with information regarding the investment product. It is also known as an Explanatory Memorandum or a Principal Brochure.

Open Architecture

A platform that offers a range of investment funds from different fund houses.

See also “Fund Supermarket”.

ORSO or Occupational Retirement Schemes Ordinance

The ordinance under which voluntary retirement schemes set up by employers for employees prior to the launch of the MPF system are regulated. “ORSO schemes” refer to the retirement schemes established under this ordinance.

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Payment of Benefit

MPF
In general, benefits may only be paid from an MPF scheme when a member reaches the normal age of retirement at 65 years. There are special circumstances under which benefits can be paid early:
• Early retirement, if a member is at least 60 and certifies that he has permanently ceased his employment or self-employment
• Death
• Total Incapacity
• Terminal illness
• Leaving Hong Kong permanently, a reason which can only be used once
• If the accrued benefit amount is less than HKD5,000 and no contributions have been made during the previous 12 months

ORSO
• If you joined the scheme on or before 1 Dec 2000, you may choose to cash out your benefits or rollover to the Saving Units of the Fidelity Advantage Portfolio Fund, or a combination of both options.
• If you joined the scheme after 1 Dec 2000, you need to transfer a minimum MPF benefit to an MPF scheme. For the amount in excess of the minimum MPF benefits, you may choose to transfer to an MPF scheme with the minimum benefits, cash out, or rollover to the Saving Units of the Fidelity Advantage Portfolio Fund, or a combination of the latter two options.

See also “Normal Retirement Age”.

Performance Since Launch

The return since the initial launch of a fund.

Personal Account

An MPF account in which accrued benefits are automatically transferred after an employee leaves an employer, if the employee does not choose to transfer the accrued benefits to an MPF account with the next employer or to another personal account. Members may not withdraw capital from a personal account until they reach the normal retirement age of 65 or under special circumstances. An employee in an ORSO scheme must also transfer Minimum MPF Benefit to a personal account when leaving an employer.

See also “Accrued Benefits”, “Master Trust Scheme” and “Preservation”.

Portability

The ability under the MPF system for a member to transfer their accrued benefits from one MPF scheme to another when they change employment. Portability is available in respect of personal accounts or those MPF benefits not related to an employee’s current employment.

See also “Master Trust Scheme”, “MPF Scheme” and “Rollover”.

Preservation

MPF

Under MPF, benefits accrued from mandatory contributions are normally preserved until members reach the retirement age of 65. Voluntary contributions can be maintained in the MPF scheme or paid to members when they change employment.

ORSO

Members who joined an ORSO scheme after 1 December 2000 are required to maintain the Minimum MPF Benefit in a personal account when they change employment. The Minimum MPF Benefit should be held in a personal account until the members reach the retirement age of 65.

See also “Mandatory Contribution”, “Minimum MPF Benefit”, “Payment of Benefit”, “Personal Account” and “Voluntary Contributions”.

Purchasing Power

The value of money expressed in terms of goods and services. Purchasing power is the quantity of goods and services that can be bought for a given unit of currency. The term is often used when discussing the impact of inflation, as inflation reduces purchasing power.

See also “Inflation Risk”.

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Record Keeper

See also “Administrator”.

Relevant Employee

An employee aged between 18 years and the retirement age of 65 years, who must be enrolled in an MPF scheme.

See also “Exempt Person”.

Relevant Income

The income from which contributions are calculated. Relevant income includes wages, salary, leave pay, fee, commission, bonus, gratuity, perquisite and allowance (but excludes any housing allowance or any long service or severance payments).

See also “Contribution”.

Risk

The possibility that an investment's actual return will be different than expected. This includes the possibility of losing some or all of the principal investment. An investment’s risk is sometimes measured by its volatility.

See also “Inflation Risk”, “Investment Risk” and “Manager Risk”.

Rollover

Rollover refers to the process of transferring accrued benefits from one scheme or account to another. This can happen when an employee leaves employment.
MPF
Under the MPF system, an employee’s accrued benefits can be rolled over from a contribution account with an employer to a personal account if the employee leaves employment. Such a personal account is required for maintaining the accrued benefits derived from mandatory contributions. Various other rollover options are usually available for voluntary contributions.

ORSO
When an employee under an ORSO scheme leaves employment, the benefits must be rolled over as two separate sums of money. The sum of money known as Minimum MPF Benefits must be rolled over into a MPF personal account. Various other rollover options are usually available for the remainder of the benefits.

See also “Payment of Benefit”, “Preservation” and “Personal Account”.

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S&P / Moody's Credit Rating

A rating of the quality of a debt instrument by the independent financial credit rating agencies Standard & Poor's (S&P) and/or Moody's. The quality of a debt instrument is based on an assessment of the creditworthiness (or ability to repay debt) of the organisation that issues the instrument. “AAA” represents the best quality rating. “A” is a lower rating than “AAA”. “BBB” is the lowest rating that is still classified as ‘investment grade’.

Self-employed Person

A person who works for himself/herself and is not an employee of an employer. These include Sole Proprietors and partners in a Partnership.
Self-employed persons are required to contribute 5% of their relevant income to an MPF scheme. The same maximum and minimum levels of contributions apply as for normal employees.

See also “Contribution”, “MPF Scheme” and “Relevant Income”.

Severance Payment

A statutory payment under the Employment Ordinance. MPF benefits accrued from employer contributions can be used to offset Severance Payments.

SFC or Securities and Futures Commission

The regulatory body which authorizes investment funds and pooled retirement schemes.

Short-term Debt Instruments

Debt instruments, such as Certificates of Deposit and US Treasury Bills, with short-term maturities. The benefits of these instruments are that they generally offer very low risk and high liquidity (i.e., they can be bought and sold easily).

See also “Asset Class”, “Bonds” and “Equities”.

Special Voluntary Contribution Account

A Fidelity account that allows a member to make additional personal contributions to the MPF, enabling members to build retirement assets on top of their mandatory contributions. the account offers more control and flexibility for contributions and withdrawals.

See also “Mandatory Contribution” and “Voluntary Contributions”.

Standard Deviation

A measure of how much the price of an investment, such as a fund or stock, fluctuates over a given period of time. Standard deviation shows the historical volatility of an investment. The higher the standard deviation, the more risky the instrument is deemed to be.

See also “Fund Risk Rating”.

Surcharge

In an MPF scheme, a surcharge is a penalty fee charged when an employer or self-employed person fails to pay to the trustee a mandatory contribution before the end of a settlement period. The contribution surcharge, paid to the MPFA, is a specified percentage of the default contribution. This additional contribution will be allocated to the member's account and recorded as a surcharge.

See also “Mandatory Contribution” and “MPFA or Mandatory Provident Fund Schemes Authority”.

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Taxation

MPF Employees
MPF contributions made by employees are tax deductible up to a maximum of HKD14,500 for the year of assessment 2012-13 and HKD15,000 for the year of assessment 2013-14 and each subsequent year of assessment. This also applies to contributions made to MPF-exempted ORSO schemes.
MPF benefits related to an employer’s mandatory contributions are not subject to Salaries Tax. However, MPF benefits related to an employer’s voluntary contributions may be subject to Salaries Tax, depending on the vesting scale applied to the benefit and the circumstances surrounding their payment.

MPF Employers
For employers, contributions are tax deductible for Profits Tax up to a maximum of 15% of an employee's total emolument.

See also “Mandatory Contribution”, “MPF-Exempted ORSO Scheme” and “Voluntary Contributions”.

Top 10 Holdings

A list of the largest underlying securities holdings of a fund, usually updated on a quarterly basis during the calendar year.

Trust

A legal arrangement where property is held by one person on behalf of another. This is a common arrangement for retirement schemes, where the trustee holds the assets of the scheme as the legal owner, on behalf of the members of the scheme, who are also referred to as the beneficiaries.

See also “Trustee”.

Trustee

One of four key roles in an MPF scheme. The trustee ensures that the scheme is administered in accordance with the trust deed and the scheme's asset has been safeguarded for the benefit of its members.

See also “Trust”.

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Unit NAV

The same as net asset value per unit.

See also “Net Asset Value (NAV)” and “Net Asset Value Per Unit”.

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Vested Benefit

The benefit received by a member from a pension scheme.
MPF
Employees are entitled to 100% of mandatory contributions and their own voluntary contributions at all times. However, employees may only be entitled to receive a percentage of the employer's voluntary contributions, depending on the vesting scale and the length of service.

ORSO
For ORSO schemes, the employee may only receive a percentage of the benefit due from their employer's contributions, depending on the vesting scale and the length of service.
The employee's own contributions are 100% vested.

See also “Vesting” and “Voluntary Contributions”.

Vesting

The right of an employee to receive employer-contributed benefits. The term is usually used in relation to a pension scheme or profit-sharing plan.

ORSO
In an ORSO scheme, vesting is usually linked to an employee’s years of service to the employer, as a means of encouraging employee loyalty. For instance, the employee may be entitled to receive an additional 10% of any benefits contributed by the employer for each year of service given to the employer. This is known as a vesting scale.

MPF
Under the MPF system, the employer's mandatory contributions must be 100% vested from the beginning of employment. In other words, the employee is entitled to 100% of the employer’s mandatory contribution from when employment begins. However, voluntary contributions made by the employer may be based on a vesting scale.

See also “Vested Benefit” and “Voluntary Contributions”.

Voluntary Contributions

A contribution made out of free choice by an employer and/or employee on top of any mandatory contributions they must make.
Voluntary contributions are different from mandatory contributions in that:
• they may be made subject to vesting 

• they may be paid when an employee leaves their employer(i.e., they are not subject to MPF preservation or portability requirements).

See also “Contribution”, “Mandatory Contribution”, “Portability”, “Preservation”, “Relevant Income” and “Vesting”.

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Withdrawal

The removal of funds from an investment account, savings plan or retirement scheme. Withdrawing from a retirement scheme is not usually available until the member leaves the scheme. Even so, MPF members may not withdraw their mandatory contributions until they reach the normal retirement age of 65 or if they meet certain specific requirements. ORSO members on leaving their scheme may be able to withdraw the balance on top of their Minimum MPF Benefit.

See also “Minimum MPF Benefit” and “Payment of Benefit”.

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Yield to Maturity

The expected annual rate of return on a bond investment if it is held to maturity.