What is MPF in Hong Kong?

MPF stands for Obligatory Provident Fund, which is a compulsory financial savings scheme that covers all employees and self-employed persons aged 18-64 in Hong Kong. You possibly can 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 rapidly ageing workpower back in 1995. The MPFSO creates the framework for implementing employment-related MPF schemes for workers within the labour pressure to obtain monetary benefits when 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 finally launched in 2000. As of 2015, over eighty five% of the labour force in Hong Kong was safeguarded with some type 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), 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. Industry Schemes

Master Trust Scheme is the most typical type of MPF scheme. It operates by pooling together contributions from different participating employers and their staff, as well as self-employed individuals, to achieve economies of scale in investments. It’s open to workers whose employers are participating within the Master Trust Scheme, as well as self-employed individuals and persons with accrued benefits, like sick pay and personal break day, to be switchred from other schemes.

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

Industry Scheme is only applicable for workers the place labour mobility is high, particularly in the catering and building industries, and particularly casual workers (hired for zgripceanu01 short-term engagement of less than 60 days or on an ad-hoc basis). Informal employees aren’t required to alter schemes when they change jobs so long as they remain in these 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 to your workers, you could need to consider factors resembling company stability, risk degree of funds, miscellaneous charges and buyer assist when it comes to choosing your trustee.

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