XII. Mandatory Provident Fund
A. Introduction to the Schemes
The MPF system was launched in December 2000 with the aim of protecting the post retirement lives of the retirees. Normally speaking, except for exempt persons, regular employees working for a continuous period of 60 days or more, casual employees in the construction or catering industry working on a day-to-day basis or for a fixed period of less than 60 days, and self-employed persons should participate in the Scheme from the age of 18-65. Therefore, work experience students who are working for 60 days or more are required by law to participate in the MPF Scheme.
There are altogether three types of MPF Schemes, namely the Master Trust Schemes, Employer-sponsored Schemes and the Industry Schemes. To ensure the security of the funds, the Schemes are all governed by the laws of Hong Kong.
Among the three types, the Master Trusts Schemes are the most common ones for employers and employees, as well as self-employed persons. Likewise, the Employer-sponsored Schemes are limited to only the employees of a single employer and its associated companies. For the Industry Schemes, only employees of the catering and construction industries, especially causal employees who are employed on a day-to-day basis for a fixed period of less than 60 days, can join. Employees can choose among the schemes provided by their employers according to their own needs.
The calculation of contributions differs among types of employees.
For regular employees having less than HK$7,100 monthly relevant income, only the respective employers have to make a 5% mandatory contribution of the employee’s relevant income. For a relevant monthly income between HK$7,100 and HK$25,000, both the employers and employees each have to make a mandatory contribution of 5% of the employee’s relevant income. Where the relevant monthly income is more than HK$25,000, the employers and employees have each to make a maximum contribution of HK$1,250.
The contributions made by the causal employees under the Industry Scheme depend on whether they are paid daily or not. The table referred from the Mandatory Provident Fund Schemes Authority, shows the amount of contribution for daily paid and non-daily paid causal employees.
Apart from the mandatory contributions, employees can consider making voluntary contributions. According to section 12A of the Mandatory Provident Fund Schemes Ordinance ( Cap. 485 ), all contributions are immediately vested in you, except for the accrued benefits derived from the employer’s contributions for offsetting severance payment and long service payment. Accrued benefits are the amount of each scheme member's beneficial interest in an MPF scheme, including sums derived from the contributions made by or in respect of that scheme member, together with any related profits or losses arising from any investments of the contributions.
Notes: With reference to Schedule 2 of the Mandatory Provident Fund Schemes Ordinance ( Cap. 485 ), relevant income refers to any wages, salary, leave pay, fee commission, bonus, gratuity, perquisite or allowance (including housing allowance and other housing benefit), expressed in monetary terms and paid by an employer to an employee. It does not include any severance payments or long service payments made under the Employment Ordinance ( Cap. 57 ).
C. Investment choice
There are different types of funds that employees can choose from. Basically, they include money market funds, guaranteed funds, bond funds, equity funds, etc. Employees can choose, according to their risk preference, from among the funds offered under the MPF Scheme selected by their employers. The fund choice and investment portfolio can be filled in on the MPF enrolment form, which is provided by your employer and must be returned to your employer.
D. Tax Concession
Tax deductions are available for an employee’s mandatory contributions, but not for voluntary contributions. According to the Mandatory Provident Fund Schemes Authority (MPFA), the maximum allowable deductions are as follows:
- $14,500 for the year of assessment 2012-13; and
- $15,000 for the year of assessment 2013-14 and each subsequent year of assessment.
E. Withdrawal of accrued benefits
Specified in section 15(1) of the Mandatory Provident Fund Schemes Ordinance ( Cap. 485 ), employees who are at the retirement age of 65 can withdraw the accrued benefits. Subsequent provisions of the same section of the ordinance now state circumstances in which employees can withdraw the accrued benefits before they reach 65 years of age. These circumstances include, but are not limited to, reaching the early retirement age of 60, permanently departing Hong Kong, total incapacity, having a small account balance of $5,000 or less, and where no contributions have made to an MPF scheme for 12 months, or death.
F. Notes to employees
Employees should have received a membership certificate from the MPF trustee within 60 days after enrolling in the MPF Scheme. A monthly pay-record showing the amount of the employee’s relevant income and contributions should also be provided by your employers within seven working days after the contribution is made. Scheme members should also receive an annual benefit statement within three months after the end of each financial year of the scheme. If you do not receive the above documents, you should contact your employers to make enquiries.
G. Handling Complaints and Enquiries
The Mandatory Provident Fund Authority (MPFA) will handle complaints on any suspected infringement of your rights to MPF benefits. The hotline number 2918 0102 is available during office hours from 8:45 am to 5:45 pm on Monday to Friday, except public holidays, for enquiries and complaints. You can also call the “Contribution Enquiry Line” at 183 3030 to check your contribution for the last three months. You are also welcome to visit MPFA offices in person for enquires, complaints or comments. Centres are located in Kowloon, Central, Kwai Fong and Kwun Tong. For more details, please refer to the MPFA website .