MPF stands for Necessary Provident Fund, which is a obligatory financial savings scheme that covers all staff and self-employed persons aged 18-sixty four in Hong Kong. You’ll be able to think of it as a safety net for retirement.
The Obligatory Provident Fund Schemes Ordinance (MPFSO) was initiated by the Hong Kong government in response to the rapidly ageing workpressure back in 1995. The MPFSO creates the framework for implementing employment-related MPF schemes for workers in the labour force to receive monetary benefits once they retire.
Following the move, the Obligatory Provident Fund Schemes Writerity (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 pressure in Hong Kong was safeguarded with some form of retirement protection compared to only 33% in 2000.
Now that you have a fundamental understanding of MPF, let’s deep dive into your should do’s (also 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 different types of MPF Schemes?
There are three types of MPF schemes:
1. Master Trust Schemes
2. Employer-sponsored Schemes
3. Trade Schemes
Master Trust Scheme is the most common type of MPF scheme. It operates by pooling together contributions from completely 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 individuals and persons with accrued benefits, like sick pay and personal time without work, to be switchred from different schemes.
The Employer-sponsored Scheme, however, is limited to staff of a single employer and its affiliated companies. As a result of membership restriction, the scheme is more value-effective for large corporations.
Trade Scheme is only applicable for workers the place labour mobility is high, especially in the catering and construction industries, and particularly informal staff (hired for short-time period engagement of less than 60 days or on an ad-hoc basis). Casual workers are not required to vary schemes once they change jobs so long as they continue to be in these industries, provided the old and new employers have registered under the identical trade scheme.
How to decide on which MPF scheme is greatest for you
Since MPF is meant to provide retirement benefits in your workers, you could wish to consider factors similar to firm stability, risk stage of funds, miscellaneous charges and buyer assist when it comes to selecting your trustee.
For instance, selecting a bank is relatively low-risk while choosing an insurance firm may provide you with a more diversified investment portfolio. You can check with the list of MPF approved trustees to help you make an informed decision.
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