ORSO: Group Retirement Planning
Hong Kong has incredible group retirement legislation in the form of the Occupational Retirement Schemes Ordinance (ORSO). It's one of the most flexible in the world. The Occupational Retirement Schemes Ordinance (ORSO) came into force on 15 October 1993, and is the governing legislation for the regulation of voluntary occupational retirement schemes operating in or from Hong Kong.
Installing a well-designed and well-communicated group retirement plan is an easy way for employers to deliver an exceptional employee benefit. However, very few employers are currently taking advantage of this opportunity because they're either unaware of the potential and don’t yet have a plan in place, or their existing plans haven’t been designed to take advantage of the benefits.
Either way, this can easily be rectified with minimal effort and expense via a well designed ORSO scheme offering:
KEY EMPLOYER BENEFITS
- Requires minimal effort and expense
- Demonstrates a commitment to employee welfare compared to rival employers
- Increased ROI on retirement benefit expenditure
- Achieve economies of scale & operating efficiencies by extending throughout the region
- Resolves a major issue for specific groups of key employees such as: mobile execs; third country nationals in China; expats in Japan and elsewhere in developing countries; and non-PRs in Singapore, with a single stroke
- Generates considerable employee affinity towards the firm from both current and ex-employees
KEY EMPLOYEE BENEFITS
- Security – the trust structure secures employee savings when they are growing and then secures their distribution if they outlive the member, as there is no probate or the possibility of Will contests.
- Flexibility – employees can save as much as they like for whatever they want and gain access to their voluntary contributions at any time, even whilst employed. They can invest in virtually any market and can drawdown on their benefits in any exchangeable currency.
- Ease of use - Employee's can personalize their use of the plan to their specific objectives and can change their mind and/or their objectives at any time.
- Low cost – plans are commission-free and services are provided at institutional rates rather than retail prices, making group plans the ideal vehicle for long-term retirement savings.
- Tax efficient – Hong Kong is the only jurisdiction we are aware of that offers tax-relief on employer contributions, tax-free gains and tax-free lump sum withdrawals. Also, as Hong Kong has double taxation agreements with numerous countries around the world, it’s possible to enjoy an equally tax-efficient retirement elsewhere. This is a huge advantage in high-tax countries such as UK, France and Canada. Finally, if someone is subject to inheritance tax, savings within regulated group retirement plans are often exempt from inheritance tax, as is the case for UK domiciled persons.
- Portability & Continuity – when an employee leaves employment they're often forced to leave their group retirement plan. For many, this is the worst possible outcome as they lose all the advantages of the trust structure and have no idea where to place their savings. Well-designed plans allow employees to transfer their benefits to new employer plans or become deferred members if they're retiring or there's no suitable plan to transfer to.
- Support – for plans to maximize their effectiveness for employers it's important that benefits are clearly communicated to employees. Providing assistance such as calculating funding requirements and tracking progress are greatly appreciated by employees. This kind of support is rarely available in Asia yet it generates significant employee engagement and employer affinity. Our investment advisory role falls into this category. Helping employees understand the investment options available and providing model portfolios to suit their circumstances alleviate concerns and helps them avoid common mistakes.
We work with leading ORSO providers to ensure you get the right scheme features and the best price for the company and scheme members.
Warning: All ORSO schemes appear on the MPFA Public Register, here is Private Capital Limited’s register entry: http://www.mpfa.org.hk/eng/public_registers/orso_schemes/ordetail.do?schId=000000000051149 Check your scheme is on the list too.