What’s MPF in Hong Kong?

MPF stands for Mandatory Provident Fund, which is a obligatory financial savings scheme that covers all workers 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 Necessary Provident Fund Schemes Ordinance (MPFSO) was initiated by the Hong Kong government in response to the quickly ageing workpressure back in 1995. The MPFSO creates the framework for implementing employment-associated MPF schemes for workers within the labour pressure to receive monetary benefits after they retire.

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

Now that you have a primary understanding of MPF, let’s deep dive into your should do’s (additionally known as your authorized 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 totally 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 commonest 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 is 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 break day, to be transferred from other schemes.

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

Industry Scheme is only applicable for employees where labour mobility is high, especially in the catering and construction industries, and particularly informal employees (hired for brief-term engagement of less than 60 days or on an ad-hoc basis). Informal employees usually are not required to alter schemes after they change jobs so long as they continue to be in these two industries, provided the old and new employers have registered under the same business scheme.

How to decide on which MPF scheme is finest for you
Since MPF is supposed to provide retirement benefits on your staff, it’s possible you’ll wish to consider factors corresponding to firm stability, risk stage of funds, miscellaneous fees and customer assist when it comes to selecting your trustee.

For instance, choosing a bank is relatively low-risk while choosing an insurance agency may provide you with a more diversified investment portfolio. You can refer to the list of MPF approved trustees that will help you make an informed decision.

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