What Is MPF In Hong Kong?

What Is MPF In Hong Kong?

MPF stands for Mandatory Provident Fund, which is a obligatory financial savings scheme that covers all employees and self-employed persons aged 18-sixty four in Hong Kong. You can think of it as a safety net for retirement.

The Mandatory Provident Fund Schemes Ordinance (MPFSO) was initiated by the Hong Kong government in response to the quickly ageing workforce back in 1995. The MPFSO creates the framework for implementing employment-associated MPF schemes for workers in the labour pressure to receive financial benefits when they retire.

Following the move, the Mandatory Provident Fund Schemes Writerity (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 power in Hong Kong was safeguarded with some form of retirement protection compared to only 33% in 2000.

Now that you've a basic understanding of MPF, let’s deep dive into your must do’s (additionally 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 different types of MPF Schemes?
There are three types of MPF schemes:
1. Master Trust Schemes
2. Employer-sponsored Schemes
3. Business Schemes

Master Trust Scheme is the most typical type of MPF scheme. It operates by pooling collectively contributions from 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 within the Master Trust Scheme, as well as self-employed individuals and individuals with accrued benefits, like sick pay and personal day without work, to be switchred from other schemes.

The Employer-sponsored Scheme, on the other hand, is limited to workers of a single employer and its affiliated companies. Attributable to membership restriction, the scheme is more value-effective for large corporations.

Business Scheme is only applicable for employees where labour mobility is high, particularly within the catering and building industries, and particularly casual staff (hired for short-time period engagement of less than 60 days or on an ad-hoc basis). Casual workers usually are not required to change schemes when they change jobs as long as they remain in these two industries, provided the old and new employers have registered under the identical industry scheme.

How to decide on which MPF scheme is greatest for you
Since MPF is meant to provide retirement benefits on your workers, you could wish to consider factors comparable to firm stability, risk level of funds, miscellaneous charges and customer assist when it comes to choosing your trustee.

For instance, selecting a bank is comparatively low-risk while opting for an insurance firm might provide you with a more diversified investment portfolio. You can confer with the list of MPF approved trustees that will help you make an knowledgeable decision.

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