What is MPF in Hong Kong?

MPF stands for Obligatory Provident Fund, which is a obligatory financial savings scheme that covers all employees and self-employed individuals aged 18-64 in Hong Kong. You can think of it as a safety net for retirement.

The Necessary Provident Fund Schemes Ordinance (MPFSO) was initiated by the Hong Kong authorities in response to the rapidly ageing workpressure back in 1995. The MPFSO creates the framework for implementing employment-associated MPF schemes for workers within the labour drive to receive monetary benefits once they retire.

Following the move, the Mandatory Provident Fund Schemes Authority (MPFA) was set up in 1998 to administer the operation of the MPF System which was eventually launched in 2000. As of 2015, over 85% of the labour drive in Hong Kong was safeguarded with some type of retirement protection compared to only 33% in 2000.

Now that you’ve a fundamental understanding of MPF, let’s deep dive into your must do’s (additionally known as your legal obligations), and things you get as an employer in Hong Kong (your entitlements), including: opening an MPF account, making MPF contributions and MPF tax deduction.

What are the totally different types of MPF Schemes?

There are three types of MPF schemes:

1. Master Trust Schemes

2. Employer-sponsored Schemes

3. Industry Schemes

Master Trust Scheme is the most common type of MPF scheme. It operates by pooling together contributions from different participating employers and their staff, as well as self-employed persons, to achieve economies of scale in investments. It’s open to workers whose employers are participating in the Master Trust Scheme, as well as self-employed persons and individuals with accrued benefits, like sick pay and personal day without work, to be transferred from other schemes.

The Employer-sponsored Scheme, however, is limited to workers of a single employer and its affiliated companies. As a result of membership restriction, the scheme is more value-effective for big corporations.

Business Scheme is only applicable for employees where labour mobility is high, particularly within the catering and building industries, and particularly informal staff (hired for brief-term engagement of less than 60 days or on an ad-hoc basis). Casual employees aren’t required to alter schemes after they change jobs as long as they remain in these industries, provided the old and new employers have registered under the same trade scheme.

How to choose which MPF scheme is best for you

Since MPF is supposed to provide retirement benefits for your employees, you could want to consider factors equivalent to company stability, risk level of funds, miscellaneous charges and customer support when it comes to picking your trustee.

For example, choosing a bank is comparatively low-risk while opting for an insurance agency could provide you with a more diversified funding portfolio. You may refer to the list of MPF approved trustees to help you make an knowledgeable decision.

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