Tuesday, May 09, 2006
Hong Kong Pension Fund Governance: A Need for Regulation?
Jamie Allen, Secretary General of the Asian Corporate Governance Association, spoke recently on whether there is a governance vacuum in Hong Kong pension fund administration. The presentation slides are here. Allen compared pension fund governance in Hong Kong with governance in North America, Japan and China.
This presentation provides an excellent primer on the international convergence of governance standards with respect to pension fund administration. Among the factors leading to convergence in the pension fund industry are recent scandals, the move from defined benefit to defined contribution plans, the growth in fund assets due to the aging of the population, and the governance role played by powerful state-run pension funds.
Allen explored the duties of pension fund trustees and the duties of the investment managers, who must be "independent of the trustees and of the custodian of the scheme assets." Cap 485A, Section 44.
With respect to administration of pension funds in Hong Kong, Allen reviewed the Mandatory Provident Fund Scheme Ordinance (Cap 485), MPFS (General) Regulation (Cap 485A) and Code on Disclosure for MPF Investment Funds .