Personal and Corporate Financial Planning
A "Business Plan", but for an individual. Surprisingly, relatively few people appreciate the need for some form of personal financial planning. Many tend to neglect their financial affairs and defer serious decisions until it is too late.
Like businesses, individuals also have objectives, most of which are connected to financial decisions. For example:
- How much life assurance and critical illness insurance should I have?
- How much should I save towards retirement each month?
- What is the best way to structure a residential mortgage loan and effectively balance the family's budget?
These objectives are important, and some form of plan is essential to ensure success. Equally, businesses invariably insure their balance sheet assets but frequently ignore their most important assets - their key personnel. Key person insurance can mean the difference between survival or failure for a business.
Retirement Benefits Plans for Directors and Employees
One headache most human resources professionals encounter is choosing appropriate protection and pension plans for employees. The practice amongst firms in Hong Kong varies enormously, ranging from simply providing the statutory MPF scheme, through to comprehensive "top-up" plans (the latter of which are usually only made available to Directors and senior-level staff). Offering attractive benefits packages to recruit or motivate senior executives, who are often mobile and on special expatriate contracts, can seem to complicate the whole situation.
The Horwath Financial Services "Employee Benefits Division" is actively involved with a number of firms in Asia in connection with the implementation of multi-jurisdictional Retirement Benefits Schemes for Directors and staff. In Hong Kong, such schemes adopt the Occupational Retirement Schemes Ordinance (ORSO), which under section 17(1)(h) allows employers to contribute up to 15% of an employee's emoluments to a recognised occupational retirement scheme, treating the contributions as fully tax-deductible.
Compared with MPF, Group Pension Plan's established under "ORSO" have several advantages, including:
- A wider choice of investment funds - around 79 (the MPF product with the most funds has only 26)
- Funds denominated in six different currencies (all MPF products' funds are denominated in HK dollars only)
- Access to 14 different investment managers (MPF provides a maximum of 8 from one provider, although 6 of the top MPF providers only give the option of one investment management company)
- Retirement from age 45 is allowed (the earliest you can normally retire from MPF is 60)