implemented in December 2000, following the enactment of the Mandatory Provident Fund Schemes Ordinance on 27 July 1995 and Provident Fund Schemes Legislation (Amendment) Ordinance 1998 in March 1998. The Mandatory Provident Fund Schemes Authority (MPFA), up and running in September 2000, is charged with supervising the provision of MPF schemes – it registers schemes and ensures that approved trustees administer schemes prudently. The MPFA have powers to ensure compliance, including the ability to conduct inspections, audits and investigations, and also to impose sanction on a trustee in the event of breaches of the legislation. Initially, all 300,000 employers in Hong Kong without an existing occupational retirement scheme are required to enrol their employees, in the region of 2.2 million individuals, in an MPF plan by 1 December 2000. Any company that has not set up an MPF plan may be liable to criminal prosecution with possible fines of up to HK$100,000 and six months imprisonment; persistent offenders risk a penalty of HK$200,000 and one year in prison. At the same time, companies hoping to be admitted as service providers were also required to register by the deadline. Mechanism As the scheme operates on the principle of fully funded defined contributions into a privately managed plan funds contributed by employers and employees have and managed as a trust, which compartmentalises fund assets from those of the manager, investment decisions are delegated to trustee in the private sector. Legislation defines three types of MPF schemes: master trust scheme – membership open to workers of different employers and different self-employed persons. These enjoy economies of scale from pooling the contributions of small employer units together for administration and investment. This type of scheme is especially suitable for small and medium-sized enterprises. employer sponsored scheme – membership open to the employees of a single employer, thus is only practical for large corporations. industry scheme – established for worker of industries where the degree of labour mobility is high, for example, catering and construction. The system is mandatory for all employees in Hong Kong who have an employment contract of 60 days or more and applies also to the self-employed between ages 18 and 65. Those employed in the catering and construction sectors are generally exempt but they may be covered on a daily basis. Hawkers (street vendors), domestic employees, persons covered by statutory pension or provident fund schemes such as civil servants or