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Employment Ordinance
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  MPF
A. Coverage

The MPF is an employment-based retirement protection system. Except for certain exempt persons (see below), if you are an employee or are self-employed, are aged between 18 and 65, and are normally residing and working in Hong Kong, you are required to join an MPF scheme.
Under the MPF System, an employee may be a regular employee or a casual employee. You are a regular employee if you are employed for a continuous period of not less than 60 days under an employment contract, either full-time or part-time.
You are a casual employee if you work for an employer in the catering or the construction industries, and are employed on a day-to-day basis or for a fixed period of less than 60 days. If you are an employer in one of these two industries, you are required to enrol casual employees in MPF schemes regardless of the length of the employment period.
You are self-employed if you earn an income from the production or trade of goods or services, in a capacity not as an employee (i.e. you work for yourself).


B. Enrolment

Relevant Employee
Your employer is statutorily obliged to enrol you in one of the registered MPF schemes available in the market. These include Master Trust Schemes, Employer-sponsored Schemes and Industry Schemes. Ask your employer for more information about the type of scheme in your company.

Employer

Except for exempt persons, you are required to enrol both full-time and part-time employees in a registered MPF scheme. All employees aged between 18 and 65 and employed for 60 days or more must be enrolled in a scheme.
If you are in the construction or catering industries, you should also enrol casual employees in a registered MPF scheme. Casual employees are those aged between 18 and 65 and employed on a day-to-day basis or for less than 60 days. See Industry Schemes for more information. In other words, if you are in one of these two industries, you have to enrol your employees in MPF schemes regardless of the length of the employment period.
You may select one or more MPF schemes available in the market and enrol your employees in these schemes. You are required to display the participation certificate issued by the MPFA.

Self-employed Person

If you fall within the definition of a 'self-employed person', and you are aged between 18 and 65, you must enrol yourself in an MPF scheme. You are required to make mandatory contributions if you earn not less than the minimum income level (i.e. currently $5,000 a month or $60,000 a year).


C. Contributions

For both employees and employers, it is mandatory to make regular contributions into an MPF scheme. If you are an employee, subject to the maximum and minimum levels of income (currently $20,000 and $5,000 per month respectively), your employer will deduct 5% of your relevant income on your behalf as mandatory contributions to a registered MPF scheme. However, you are not required to make contributions for the first 30 days of your new employment and the following incomplete contribution period. Your employer will also be required to contribute an amount equivalent to 5% of your relevant income to the MPF scheme, subject only to the maximum level of income (currently $20,000 per month). This amount will immediately be vested in you as your accrued benefits in the scheme.


If you are self-employed, subject to the maximum and minimum levels of income (currently $20,000 and $5,000 per month respectively or $240,000 and $60,000 per year respectively), you have to contribute 5% of your relevant income. Self-employed persons can opt to make contributions on a monthly or yearly basis.


Relevant income includes wages, salaries, leave pay, fee, commission, bonus, gratuity, perquisite or allowance, but excludes housing allowance or housing benefits. It also does not include severance payments and long service payments.

Both you and your employer can opt to make extra, voluntary contributions in addition to your mandatory contributions.

Notes for Employers

Calculation, deduction and contribution

You must calculate an individual employee's relevant income and the amount of contribution for each contribution period. You should then deduct the mandatory contribution from the employee's income, and pay the employer's contribution from your own funds for the employee's benefit.

Contribution holiday

Employers' contributions shall count from the first day of employment while the employee is not required to make contributions for the first 30 days of employment and the first incomplete payroll cycle immediately following the 30-day contribution holiday (not applicable to casual employees).

Industry Schemes

Employers in the construction and catering industries who have enrolled their employees with the two approved trustees under the Industry Schemes may choose to make contributions either on the next working day following the pay-day, or within 10 days after each payroll period. The two approved trustees are Bank of East Asia (Trustees) Limited and Bank Consortium Trust Company Limited.

Remittance Statements and Pay Records

If your payroll cycle is more frequent than monthly, you can still make contributions for your employees within the first 10 days of the following month.
When remitting payments, you must provide the trustee (your MPF provider) with a remittance statement showing the relevant income and amount of contribution of each employee.

You must also provide each employee with a monthly pay-record showing the employee's relevant income and the amount of contributions (both theirs and yours) within seven working days after the mandatory contributions are made. However, if you are an employer in the construction or catering industry participating in an Industry Scheme and have chosen to pay contributions on the next working day following the pay-day, you do not need to comply with this requirement. Click here for more information on the Industry Schemes.

Termination of Employment

When an employee ceases employment with your company or organization, you can arrange for the last payment of that employee's MPF contribution together with those of other employees at the next contribution day, and notify the trustee of the departure date of the employee concerned in the remittance statement.

Notes for Self-Employed Persons

The mandatory contribution is calculated at 5% of your relevant income, subject to a maximum income level of $20,000 a month (or $240,000 a year) and a minimum income level of $5,000 a month (or $60,000 a year). You can opt to make contributions on a monthly or a yearly basis.

You can calculate your relevant income in one of the following ways:
  • You can use the 'assessable profits' stated in your most recent notice of assessment issued by the Inland Revenue Department;
  • You can use the basic personal allowance as defined under section 28 of the Inland Revenue Ordinance;
  • You can contribute the maximum amount of $1,000 per month or $12,000 per year; or
  • You can make an income declaration to your trustee.
If your business suffers a loss, you, as a self-employed person, can lodge a statement with your trustee (MPF provider) showing the amount of the loss and how it was calculated, and request to discontinue payment of mandatory contributions until your relevant income again exceeds the minimum level of income ($5,000 per month or $60,000 a year).


D. Rights, Obligations and Benefits

Rights and Benefits of Employees

Once your employer has enrolled you in an MPF scheme, the MPF trustee will issue a membership certificate to you. You have the right to choose among the constituent funds offered under the scheme.

Full and Immediate Vesting

In general, once your employer remits your and your employer's joint mandatory contributions to the scheme trustees, the contributions will be fully and immediately vested in you.

Obligations of Employers

Enrolment

Except for certain exempt persons, you are required to enrol both full-time and part-time employees aged between 18 and 65 and employed for 60 days or more in an MPF scheme.

If you are in the construction or catering industries, you should also enrol casual employees in a registered MPF Scheme. Casual employees are those aged between 18 and 65 and employed for less than 60 days. In other words, if you are in one of these two industries, you have to enrol your employees in MPF schemes regardless of the length of the employment period. See Industry Schemes for more information.
You may select one or more MPF schemes available in the market and enrol your employees in these schemes. You are required to display the participation certificate issued by the MPFA.

You may retain your MPF exempted ORSO scheme in addition to an MPF scheme. If your MPF-exempted ORSO scheme is open to new employees, you are required to offer an option to new eligible employees to choose between the MPF and ORSO schemes.

MPF Schemes

There are three types of MPF schemes under the MPF System. For more information, click here.

MPF Exempted ORSO Schemes

MPF Exempted ORSO Schemes are ORSO schemes exempted by the MPFA following the implementation of the MPFSO on December 1, 2000. They now run parallel with other MPF schemes.

Calculations, Deductions and Contributions

You are required to calculate an individual employee's relevant income and the amount of contribution for each contribution period, deduct the mandatory contribution from the employee's income, and pay the employer's contribution from your own funds for the employee's benefit.

Industry Schemes

Employers in the construction and catering industries who have joined an Industry Scheme may choose to make contributions on the next working day following the pay-day or within 10 days after each contribution period. Click here for more information on the Industry Schemes.

Remittance Statements and Pay Records

If your payroll cycle is more frequent than monthly, you must still make contributions for your employees within the first 10 days of the following month.
When remitting payments, you must provide the trustee (your MPF service provider) with a remittance statement showing the relevant income and amount of contribution of each employee.

You must also provide each employee with a monthly pay-record showing the employee's relevant income and the amount of contributions (both theirs and yours) within seven working days after the mandatory contributions are made. However, if you are an employer in the construction or catering industry participating in an industry scheme and have chosen to pay contributions on the next working day following the pay-day, you do not need to comply with this requirement. See Industry Schemes for more information.

Termination of Employment

When an employee ceases employment with your company or organization, you can arrange for the last payment of that employee's MPF contribution together with those of other employees at the next contribution day, and notify the trustee of the departure date of the employee concerned in the remittance statement.


E. Tax Concessions

For Employees

Your mandatory contributions are tax deductible, subject to the maximum amount of $12,000 per year.

For Employers

Your MPF contributions are tax deductible, to the extent that they do not exceed 15% of employees' yearly emolument.


F. Offsetting of Severance and Long Service Payments

If you are an employer, you can offset long service payment and severance payment as required under the Employment Ordinance by the accrued benefits derived from contributions you have made to the employee in the MPF scheme. You can apply to the trustee for payment of the relevant amount to you for this purpose, but only after you have paid the employee his or her due long service payment and severance payment.

Please note that in offsetting this type of compensation, you need to follow other requirements set out in the Employment Ordinance concerning such payments.


G. Withdrawal of Accrued Benefits

Since the MPF System was introduced to help you, as an income earner, save for your old age, it makes sense that you can only claim for payment of accrued benefits when you reach the age of 65, as stipulated in the MPFSO.

However, there are circumstances under which accrued benefits may be paid before reaching the age of 65. They are:
  • early retirement at the age 60; or
  • permanent departure from Hong Kong; or
  • total incapacity; or
  • death (note that the MPF will be regarded as part of the member's estate and can be claimed by the personal representative of estate); or
  • small balance account of less than $5,000, no contributions made to a scheme for 12 months, and declared not to become employed or self-employed within the foreseeable future.
Please refer to MPF Guideline IV.4 and respective application forms for details on requirements and procedures regarding claims for payment of accrued benefits


H. Change of Employment

Employees

If you change your job, there are three ways to handle the accrued benefits of your MPF accounts:
  • transfer the accrued benefits to another scheme that your new employer is participating in; or
  • retain the accrued benefits in the existing scheme (i.e. have a preserved account in the existing scheme); or
  • transfer the accrued benefits to a preserved account in another scheme (i.e. another preserved account).
See below for more information on preserved accounts.

Self-Employed Persons

When you change employment and cease working as a self-employed person, you may transfer the accrued benefits from your scheme to another scheme.

Preserved Accounts

If you change your job, you may opt to transfer the accrued benefits to a preserved account either in the scheme participated by your former employer or in another scheme.

Preserved accounts serve a practical purpose in that you can use them to retain your accrued benefits derived from previous jobs under your own name. However, if you have multiple preserved accounts, you may wish to consolidate them for easier management.

Nevertheless, you will need to take into account a number of factors when consolidating your preserved accounts. For example, you should take note of the timing because consolidation involves the redemption of funds in which bid/offer spreads may cause losses. Please refer to our publication and form related to transfer of MPF benefits.

The Authority keeps a database of members' preserved accounts, if you cannot remember how many preserved accounts you have, you may click here to download the request form and return to us in person or by mail.


I. Unclaimed Benefits

If you become entitled to be paid the accrued benefits but your MPF trustee is unable to locate you, your trustee will publish a notice in the newspaper inviting you or your representative to lodge a claim for payment of those benefits. If there is still no claim of benefits after the publication of the notice, your trustee may treat your benefits as unclaimed benefits.

Similarly, if you have lodged a claim for payment of benefits but your trustee is unable to locate you subsequently, your trustee will send a reminder notice to you for arrangement of the payment. If your trustee receives no reply after a certain period of time, the trustee may treat your benefits as unclaimed benefits.

Particulars of unclaimed benefits will be published by the trustee once a year and are reported to the MPFA. The MPFA also maintains an unclaimed benefits register for inspection by the general public.


(Sources from the Mandatory Provident Fund Schemes Authority)