Why Did the Government Want MPF Shielded from Bankruptcy Claims?

Why Amend the Law to Protect Bankrupts’ MPF?

A 2008 High Court ruling that a bankrupt teacher’s provident fund had to go to the Official Receiver sparked a government plan to amend the law so MPF members in bankruptcy would not have to use MPF to repay debts. With over 7,700 bankruptcy petitions in the first ten months of the year, whether bankrupts’ MPF could likewise be seized threatened fresh legal disputes.

What Did the Amendment Propose?

The government wanted to act first and state explicitly that creditors or liquidators could not count MPF as a bankrupt’s assets, preserving the money for old age. Under existing law, bankruptcy was not among the grounds for early MPF withdrawal.

What Grey Areas Remained?

Lawmaker James To flagged loopholes: bankruptcy orders typically last four years — if someone went bankrupt four years before 65, could the receiver force them to use the MPF drawn at 65 to repay debts? And if someone went bankrupt after 65 through speculation, should MPF still be shielded? He urged the government to clarify every grey area before legislating.