How can HK Non-governmental Organisation (NGO) use actuarial service to enhance financial planning?

To enable subvented NGOs to exercise prudent financial management and devise more attractive staff remuneration packages through better financial forecast, the Task Force for Review on Enhancement of Lump Sum Grant Subvention System (LSGSS) recommended regularising the provision to subsidise NGOs to use actuarial service for financial projections to assist NGOs in striking a balance between maintaining financial stability and protecting staff’s interest. The Social Welfare Department (SWD) announced that a one-off subsidy program is available for qualified NGOs to engage external professionals to conduct an actuarial study in the year 2022-23.

Possible scope of actuarial study

This has encouraged Hong Kong NGOs to consider engaging external professionals to conduct actuarial projections to help their organisations maximise the study outcomes. NGOs may consider conducting actuarial projections covering one or more of the following areas:

• Long-term workforce projections for Snapshot Staff, LSG Staff and self-financing staff, etc., taking into account staff’s retirement, turnover and other movement factors;
• Estimation of long-term costs for meeting staff’s contractual obligations, including total remuneration, provident fund and other benefit costs, taking into account various salary structures and compensation packages for different staff groups;
• Projection of income and payout cash flows for Provident Fund Reserve (PF Reserve), Holding Account Reserve or other reserves, estimation of reserve balances, and advice on viable options for the optimal use of reserves for NGO and its staff – in line with the guidelines of “Maximised Use of Reserve (Level One)” in the Best Practice Manual (BPM) for NGOs under the LSGSS; or
• Exploration of options to deploy spare resources or reserves to enhance human resource policies and practice or staff development programs.

Why WTW

Being the largest employee benefit actuarial consulting firm in Hong Kong, WTW is well positioned to assist NGOs in conducting the actuarial study:

• Strong actuarial experience: We have a long track record for using actuarial projections to help a wide range of clients including NGOs make sensible strategic decisions.
• Wealth of actuarial talent: We have a large pool of experienced and fully qualified actuaries, specialised in actuarial studies on employee benefits and human resources policies.
• Proven track record: We have proven actuarial processes and models in place, which can be adopted efficiently to meet NGOs’ specific requirements.
• All-round services: Besides actuarial services, we also have employee benefits and human resources consulting services, which can be leveraged to formulate viable HR enhancement options and implement changes.
• Simple and transparent: We are committed to working collaboratively with NGOs to set up the models and actuarial assumptions that reflect the NGO’s unique situation. More importantly, we can present the projection results in layman terms to NGOs’ stakeholders.

If you would like to know how WTW can help, please feel free to contact your WTW consultants to understand more.

Contacts

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Wing Lui

Director, Retirement Hong Kong

email Email phone +852 2195 5852

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Elaine Hwang

Senior Director & Business Development Lead, Greater China

email Email phone +852 6466 7833

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