The Mandatory Provident Fund (MPF) is a compulsory retirement savings scheme designed to help employees, residents, and eligible expatriates in Hong Kong secure their financial future. Managed by private trustees, the MPF scheme ensures both employers and employees contribute towards long-term savings.

Understanding MPF contributions, eligibility, tax benefits, and withdrawal options is essential for both employers and employees.

How is MPF Calculated?

Both employers and employees must contribute 5% of the employee’s monthly income, capped at HK$1,500 per month for salaries above HK$30,000.

 Example Calculation:

• Salary below HK$7,000 → Employer contributes 5%, employee contribution is optional.

• Salary between HK$7,000 – HK$30,000 → Employer and employee each contribute 5%.

• Salary above HK$30,000 → Both contributions capped at HK$1,500 each.

When Do Employers Need to Enroll Employees in MPF?

 Employers must enroll new employees in an MPF scheme within 60 days of their start date.
Contributions must be paid by the 10th of each month.
Employers deduct the employee’s portion from their salary and submit the full amount to the MPF scheme.

 Penalty for Late MPF Enrollment – Employers failing to enroll employees by the 60th day may face:
A fine of up to HK$350,000
Up to 3 years of imprisonment

Who is Eligible for MPF?

All employees aged 18 to 65 working in Hong Kong, regardless of nationality, are required to contribute to MPF. However, some individuals are exempt from MPF contributions:

 Domestic workers
Self-employed individuals
Civil servants & school teachers (covered by separate pension schemes)
Members of occupational retirement schemes with MPF exemption
Foreign employees on short-term contracts (less than 13 months)
Employees covered by overseas retirement schemes

 Employers must provide monthly pay records to employees within 7 working days of making contributions.

Types of MPF Schemes in Hong Kong

Hong Kong offers three types of MPF schemes to cater to different business needs:

1. Master Trust Schemes (For SMEs & Individuals)

Open to small and medium-sized businesses, self-employed individuals, and individuals transferring MPF funds.
Most commonly used scheme.

2. Employer-Sponsored Schemes (For Large Companies)

 Designed for large corporations with many employees.
Only open to employees of a single employer and associated companies.

3. Industry Schemes (For High-Turnover Sectors)

 Specifically for employees in high-mobility industries, such as:

• Catering

• Construction
  Suitable for casual workers who frequently change employers.

MPF Investment Options

MPF contributions are invested in various funds, and employees can choose from different investment strategies based on their risk tolerance and financial goals.

 MPF Conservative Fund – Low-risk, preserves capital.
Money Market Fund – Short-term, stable investments.
Guaranteed Fund – Provides capital protection with fixed returns.
Bond Fund – Invests in fixed-income securities.
Mixed Assets Fund – A balanced mix of stocks and bonds.
Equity Fund – Higher risk, focuses on stocks.
Index Fund – Tracks market indices for passive investment.

Employees should regularly review their investment portfolio to ensure it aligns with their financial objectives.

How to Enroll in an MPF Scheme?

Employee Enrollment Process:

 Complete an Enrollment Form with:

• Choice of MPF scheme

• Personal details & tax residency self-certification

• Employee’s signature
  Submit the form to the MPF trustee to open an MPF account.
  Receive a Participation Notice confirming MPF scheme details.

 If an employee fails to submit the form, the employer must still enroll them within 60 days to remain compliant.

MPF Tax Benefits

MPF contributions offer tax-saving opportunities for both employees and employers:

 Employees can claim a tax deduction of up to HK$18,000 per year.
Employers can deduct up to 15% of an employee’s annual salary from taxable income.

These tax benefits make MPF a valuable long-term savings tool for retirement planning.

Withdrawing MPF Funds

Employees can withdraw MPF savings under specific conditions:

 Retirement at age 65 → Full MPF withdrawal.
Permanently leaving Hong Kong → Withdrawal allowed with proof of departure.
Early retirement (age 60-64) with no further employment.
Total incapacity → Unable to work due to health conditions.
Small balance (under HK$5,000) with no MPF contributions for 12 months.

MPF Withdrawal Process:

 Notify MPF Trustee of intent to withdraw.
Submit required documents (e.g., proof of leaving Hong Kong, identification).
Choose withdrawal method (Lump-sum or transfer to an overseas retirement scheme).
Funds are disbursed after approval.

Final Thoughts

The Mandatory Provident Fund (MPF) plays a crucial role in retirement planning for employees in Hong Kong. Understanding MPF contributions, investment options, tax benefits, and withdrawal procedures helps both employers and employees manage retirement savings effectively.

📢 Need assistance with MPF enrollment, compliance, or investment planning? Contact us today for expert guidance!