What is MPF in Hong Kong?

MPF stands for Necessary Provident Fund, which is a compulsory savings scheme that covers all employees and self-employed individuals aged 18-64 in Hong Kong. You’ll be able to think of it as a safety net for retirement.

The Mandatory Provident Fund Schemes Ordinance (MPFSO) was initiated by the Hong Kong authorities in response to the quickly ageing workforce back in 1995. The MPFSO creates the framework for implementing employment-associated MPF schemes for workers in the labour pressure to receive financial benefits once they retire.

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

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

What are the completely 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 commonest type of MPF scheme. It operates by pooling together contributions from totally different participating employers and their workers, as well as self-employed individuals, 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 day off, to be switchred from other schemes.

The Employer-sponsored Scheme, then again, is limited to workers of a single employer and its affiliated companies. Attributable to membership restriction, the scheme is more price-effective for big corporations.

Trade Scheme is only applicable for workers the place labour mobility is high, especially 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 foundation). Casual staff are usually not required to change schemes once they change jobs as long as they continue to be in these two industries, provided the old and new employers have registered under the same industry scheme.

How to decide on which MPF scheme is finest for you
Since MPF is meant to provide retirement benefits to your employees, it’s possible you’ll wish to consider factors comparable to company stability, risk level of funds, miscellaneous prices and buyer support when it comes to selecting your trustee.

For instance, choosing a bank is relatively low-risk while choosing an insurance firm may provide you with a more diversified funding portfolio. You possibly can confer with the list of MPF approved trustees to help you make an informed decision.

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