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Launched in 2000, the Mandatory Provident Fund (MPF) is a privately managed savings scheme that is designed to help you build your savings through a suite of individual, employer-sponsored, and industry schemes. To help you understand better, our friends from Pacific Prime Hong Kong are here to explain how it works, the amount you are expected to contribute, and more.
Check your eligibility
First, you should know that the MPF scheme only applies to full- and part-time employed citizens and eligible expats in Hong Kong between 18 and 64 years old. So if you are already registered by an overseas retirement fund or have been in Hong Kong for fewer than 13 months, then you will be exempted from the scheme.
How does the MPF scheme work?
By your 60th day of employment, your employer will have discussed with you the details of the MPF scheme and the investment options available for you to choose from. Once enrolled, monthly contributions made by you and your employer will go towards building a respectable savings fund, which you can withdraw when you reach age 65. However, certain circumstances will allow you to withdraw earlier, such as early retirement, leaving Hong Kong permanently, being diagnosed with a terminal illness, and death, to name a few.
How much is contributed by you and your employer?
If you are a salaried worker, you are obligated to contribute at least 5% of your minimum relevant income or HKD $7,100 per month. But if you are paid a salary of less than HKD $7,000 per month, then only your employer has to contribute 5% of your monthly salary, not you. However, once your earnings reach HKD $7,000 and above, you will be obliged to pay 5% of your monthly salary.
Note: Your contribution will be automatically deducted from your salary, and your employer must make their monthly contribution by the 10th day of every month.
For non-monthly paid employees or those who are paid daily, weekly, or bi-monthly, your employer must first calculate the minimum and maximum relevant income levels of your wage period. See an example for weekly paid employees here.
What are your benefits as an employee?
The scheme is managed by experts who invest their time and knowledge in building a diversified investment portfolio for all scheme members. And since contributions are pooled together by you, other scheme members, and employers, you will surely see your investment grow to a decent size by the time you retire. Additionally, you can also claim up to HKD $18,000 in contributions annually for your tax returns in Hong Kong.
Learn more from Pacific Prime Hong Kong
Pacific Prime is a leading and reputable health insurance broker in Hong Kong. The company’s strengths lie within their experienced multilingual staff, who can provide localized support and impartial advice to expats who need expat health insurance or other insurance plans like family health insurance or maternity insurance while working and living in Hong Kong.