What is MPF ?

MPF refers to “Mandatory Provident Fund”. Nowadays, Hong Kong is facing with a challenge of rapidly ageing population. The percentage of population over the age of 65 will be increased from 15% (in 2014) to 36% (in 2064) and less working aged adults will support the retirees. In order to help the ageing workforce to save for their retirement, the MPF system was launched in December 2000.

The MPF System in Hong Kong belongs to the second pillar in three-pillar approach which was recommended by World Bank: a mandatory, privately managed, fully funded contribution scheme. There are three types of MPF Scheme in Hong Kong:

1. Master Trust Schemes

The most common type of MPF scheme which pools together contributions from various employers and their employees, and contributions from self-employed persons. This scheme is the most efficient in terms of scheme administration due to economies of scale.

2. Employer-sponsored Schemes

The membership in this type of scheme is limited to the employees of a single employer and its associated companies. Due to its restriction in membership, it is only cost-effective to run an employer-sponsored scheme if the number of employees is large.

3. Industry Scheme

It is established for employees of the catering and construction industries, particularly casual employees (i.e. workers employed on a day-to-day basis or for a fixed period of less than 60 days). They do not need to change schemes when they change jobs within these two industries, so long as their previous and new employers have registered with this scheme.

 

The contribution for employer and employee is shown below:

(Both full-time and part-time employees are covered by the MPF System.)*

Monthly Relevant Income	Amount of Mandatory Contributions Payable by Employer	Amount of Mandatory Contributions Payable by Employee
Less than $7,100	Relevant income x 5%	No contributions required
$7,100 to $30,000	Relevant income x 5%	Relevant income x 5%
More than $30,000	$1,500	$1,500

The contribution for self-employed person is shown below:

(The person who above or 18 but under 65 years of age must enroll themselves in an MPF scheme within 60 days after they have become self-employed.)*

Relevant Income:	Mandatory Contributions
Less than $7,100 per month (or $85,200 per year)	No contributions required
$7,100 to $30,000 per month (or $85,200 to $360,000 per year)	Relevant income x 5%
More than $30,000 per month (or $360,000 per year)	$1,500 per month (or $18,000 per year)