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2022-01-13 |
【4 mins Read】OneStart Weekly - What is MPF

What is MPF? 【Employer’s POV】

Finally formed your own company and got everything running, but still there are always some logistics work you have to care for. For example, MPF – something so familiar to us but yet we seem to know nothing about it when questions become tricky at hands. Every month part of our salary will be allocated to this so called MPF scheme, but what is MPF? Why do we need it and what is it usage? OneStart Business Centre knows all your worries and hope to help you with it. Therefore, we now are offering you with a new professional service item! Providing you with professional insurance and MPF Consulting Service. In our new series of blogs, we will dive into MPF and explore what it is.

  • So… What is MPF?

MPF (Mandatory Provident Fund Schemes) is a compulsory saving scheme for the retirement of residents in Hong Kong. Under the Provident Fund Schemes Legislation (Amendment) Ordinance, the scheme was activated from December 2000, requesting all employers and employees, except those with exemptions, to participate. Participants would only be allowed to retrieve their savings under the scheme, until they have aged to 65 or under any other special occasions like immigration.

  • Do I need to register all of my staff under the MPF scheme?

Under the Ordinance, employers would have to enroll their employees into the scheme, if they are non-casual employees, aging between ages from 18 to 65. Non-casual employees are referring to those who are engaged in full-time or part-time jobs for a continuous period of not less than 60 days. Enrolment have to be made by the employers within 60 days of the employees’ employment.

If your company is engaged in the construction or catering industry, any casual employees working under your premises would have to be enrolled in the MPF scheme. Casual employees are those being employed on a day-to-day basis or for a fixed period of less than 60 days. Employers would have to enroll their casual employees within 10 days of their employment.

  • After the MPF enrolment registration, do the mandatory contributions start right away?

Both the mandatory employer's contribution and the mandatory employees' contributions are requested to be paid within 10 calendar days of each month. Therefore, employers should be alert that you have to pay both employer's and employees' contributions to your respective MPF agencies, on or before the 10th of each month.  Calculation of for the employer's mandatory contributions starts from the very first day of employment of the eligible employee. While NEW employee can enjoy an initial 30-day contribution holiday, and only start to pay their mandatory contributions from the first complete calendar month after such 30-day payment free exemption.

Take Chris as an example: Chris is a new employee at your company and started working on 15th September. As his employer, you will have to start to pay for the employer's mandatory contribution from 15th September. Chris as an employee enjoys the 30-day contribution holiday, NOT having to pay his mandatory contribution from 15th September to 14th October. As employer cannot enjoy such holiday, in the first 2 months, you will have to pay for the contributions, making no differences with the following months in Chris' employment. However, for Chris, because after the 30-day holiday (from 14th October), is not a complete calendar month, he would not have to pay his contribution until 31th October. All in all, Chris will only have to start paying for his employees' mandatory contributions, starting from the 3rd month (November) of his employment.

  • Can I decide how much I am paying for my employees' MPF contributions?

Employers have NO rights to decide the amount of contributions they are paying. The government have set a fixed rate of 5% for the mandatory contributions. The 5% is calculated upon the employees' income or salary of each month, with an upper contribution limit of HKD 1,500.

Starting from the first day of employment, employers have been obligated to pay for their employees' MPF. There is no lower limit of employees' income to be subjected to MPF calculations, but instead there is an upper limit of income of HKD 1,000 daily or HKD 30,000 monthly.

For Chris, if his monthly salary is HKD 30,000, then as his employer, you would have to pay (30,000 x 5%) = HKD 1,500 monthly for his MPF's employer's contribution.

OneStart Business Centre now provides you with professional MPF consultation services. We could help you to tackle all the annoying but important processes of MPF member registration and asset transference, as well as MPF personal accounts consolidation.  OneStart Business Centre have planned other new related insurance and MPF consulting services, and welcome you to call over and ask our agents about it. 【CLICK HERE】 for more information on the other services.

Interested in OneStart Business Centre’s insurance and MPF consulting services? Phone in to our hotline 3575 6888 or WhatsApp our helpful consultants! Virtual Office is one call away!