MPF Scheme - Regulatory framework

Mandatory Provident Fund Scheme has been implemented since 1st December 2000, which is planned overall by Mandatory Provident Fund Scheme Authority. MPFA supervise the scheme jointly with the following


regulatory institutes:
  • Securities and Futures Commission
  • Office of the Commissioner of Insurance
  • Hong Kong Monetary Authority


Types of MPF scheme

Master Trust Scheme: Its membership is open to the relevant employees of more than one employer, self-employed persons and persons with accrued benefits transferred from other schemes. By pooling together contributions of small employer units, master trust schemes can enjoy a high degree of efficiency in terms of scheme administration and investment, resulting in economies of scale. This type of scheme is most suitable for small- and medium-sized companies.


Employer-sponsored Scheme: Its membership is limited to the relevant employees of a single employer and its associated companies. With such limitation in membership, it is only cost-effective to run an employer-sponsored scheme if the number of employees is large enough


.Industry Scheme: It is specially established for employees of industries with high labour mobility (now is including catering and construction industries). An employee who is a member of an industry scheme does not need to change schemes if he or she changes employment within the same industry, so long as his or her previous and new employers are participating in the same industry scheme.


Who are required to participate MPF scheme?

All employees with age between 18 and 65 and all self-employed persons with age below 65, except those who are exempted, has to participate a MPF scheme and make contribution.


An Employee refers to any full-time and part-time employee under an employment contract (by oral or in written) for a continuous period of not less than 60 days. For catering and construction industries, casual employees engaged under an employment contract less than 60 days also covered by MPF scheme.


A self-employed person refers a person whose income is derived from the production of goods or services in Hong Kong, or from trading in goods or services in or from Hong Kong, including sole proprietor or partner of a partnership.


Persons exempted from participating MPF scheme:
  • Employees and self-employed persons who, at the date of MPF scheme is implemented, i.e. 1st December 2000, has attained age 64;
  • Domestic employees;
  • Self-employed hawkers;
  • People covered by statutory pension or provident fund schemes, such as civil servants and subsidized or grant school teachers;
  • People from overseas who enter Hong Kong for employment for less than 13 months, or who are covered by overseas retirement schemes;
  • Employees of the European Union Office of the European Commission in Hong Kong;
  • Members of occupational retirement schemes which are granted exemption certificates.


MPF Scheme Contribution

MPF contribution includes "Mandatory Contribution" and "Voluntary Contribution".


"Mandatory Contribution": it is the obligation of all employees and self-employed persons (except the exempted persons) to make mandatory contribution. An employee and his/her employer must contribute 5% of the relevant income respectively if the monthly relevant income over HK$5,000. Self-employed person must contribute 5% of the assessable profits. The contribution for casual employees of industry scheme made as below:


Contribution for employees with daily payroll (HK$)
Wages per day Employer Employee Total
Below 130 7.5 Nil 7.5
130 - 259 7.5 7.5 15
260 - 389 15 15 30
390 - 519 22.5 22.5 45
520 - 650 30 30 60
Above 650 30 30 60


"Voluntary Contribution": Employers, employees and self-employed persons can make voluntary contribution on top of mandatory contribution. There is no limit for voluntary contribution.


"Relevant income": includes any wages, salary, leave pay, fee, commission, bonus, gratuity, perquisite or allowance (other than a housing allowance or other housing benefit), expressed in monetary terms.


When do the MPF contributions belong to me?

According to the guideline of "Vesting", the accrued benefits of the mandatory contributions including the investment return, are belong to employee at the time of contribution made.


The accrued benefits of the voluntary contributions, made by employee and self-employed person, belong to themselves at the time of contribution. The accrued benefits of the voluntary contributions made by employer will belong to the employee according certain rules of the scheme.


When can I withdraw the accrued benefits?

According to the requirement of "preservation", all accrued benefits of the mandatory contributions must be preserved to the age 65, when the member can withdraw the accrued benefits in lump sum. The accrued benefits of the voluntary contributions can be withdrawn according to the regulation of the scheme.


However, the scheme member can withdraw the accrued benefits before the attainment of age 65 under the following circumstances:

  • He/she has died;
  • He/she has attained age 60 and retired early;
  • He/she has departed or will depart from Hong Kong permanently;
  • He/she has become totally incapacitated; or
  • He/she has a balance below HK$5,000 in an MPF scheme, provided that
    • He/she will not be employed or self-employed in the future;
    • He/she has not made any mandatory contribution in a period of 12 months before the claim;
    • He/she has only one MPF scheme.
What can I do if I change my employment?
Employee can handle his/her accrued benefits as below:
  • Employee in a Master Trust Scheme can transfer the accrued benefits to any one account belongs to him/her; or retain the accrued benefits in existing account;
    • Employee in a Employer-Sponsored Scheme has to transfer the accrued benefits to new employer's scheme or any one account belongs to him/her;
    • Employee in an Industry Scheme can retain the accrued benefits in the same account if the former and new employers joined the same Industry Scheme; or the employee can transfer the benefits to any one account belongs to him/her.
  • If a self-employed person in a Master Trust Scheme or Industry Scheme become employed, he/she can retain the accrued benefits in existing account or transfer to the new employer's scheme or any one account belongs to him/her.


Can the MPF contribution be exempted from taxation?

Employee and self-employed person can enjoy a tax allowance limited to HK$12,000 per year for the mandatory contribution only. Employer can enjoy a tax exemption on both mandatory and voluntary contributions up to 15% of the total payroll of the employee.


Can employee obtain both MPF accrued benefits and long service payment / severance payment?

Employer can offset the long service payment or severance payment as required under the Employment Ordinance with the accrued benefits derived from the contribution made to the employee in the MPF scheme. Therefore, employee can only obtain the MPF accrued benefits or the long service payment / severance payment whichever is greater.


Is my MPF contribution safe?
The MPF Scheme Ordinance stipulates that certain rules and regulations to protect the contribution of MPF scheme:
  • Capital requirement for service providers:
    • Trustee requires a paid-up capital of HK$150 million or net assets in equivalent amount;
    • Custodian requires a paid-up capital of HK$150 million or net assets in equivalent amount;
    • Investment Manager requires a paid-up capital of HK$10 million or net assets in equivalent amount;
  • Trustee has to be insured under a Professional Indemnity Insurance protects the member against any fraudulent or negligent behaviour;
  • Under the MPF Scheme Ordinance, a statutory compensation fund has been set up to compensate scheme members should the indemnity insurance not fully cover those losses. The Government had injected HK$600 million as the seed money of the fund, and a levy of 0.03% on the net asset value of all MPF schemes will be charged as additional injection of the fund.