MPF stands for Mandatory Provident Fund, which is a compulsory savings scheme that covers all employees and self-employed individuals aged 18-sixty four in Hong Kong. You possibly can think of it as a safety net for retirement.
The Obligatory Provident Fund Schemes Ordinance (MPFSO) was initiated by the Hong Kong government in response to the rapidly ageing workpower back in 1995. The MPFSO creates the framework for implementing employment-related MPF schemes for workers within the labour pressure to receive monetary benefits when they retire.
Following the move, the Obligatory Provident Fund Schemes Creatority (MPFA) was set up in 1998 to administer the operation of the MPF System which was finally 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 got a basic understanding of MPF, let’s deep dive into your must do’s (additionally known as your authorized obligations), and things you get as an employer in Hong Kong (your entitlements), including: opening an MPF account, making MPF contributions and MPF tax deduction.
What are the completely different types of MPF Schemes?
There are three types of MPF schemes:
1. Master Trust Schemes
2. Employer-sponsored Schemes
3. Industry Schemes
Master Trust Scheme is the most common type of MPF scheme. It operates by pooling collectively contributions from totally different participating employers and their workers, zgripceanu01 as well as self-employed persons, to achieve economies of scale in investments. It’s open to workers whose employers are participating within the Master Trust Scheme, as well as self-employed persons and individuals with accrued benefits, like sick pay and personal break day, to be switchred from different schemes.
The Employer-sponsored Scheme, then again, is limited to staff of a single employer and its affiliated companies. On account of membership restriction, the scheme is more cost-effective for giant corporations.
Business Scheme is only applicable for employees the place labour mobility is high, particularly in the catering and building industries, and particularly informal employees (hired for brief-time period engagement of less than 60 days or on an ad-hoc basis). Informal staff aren’t required to vary 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 best for you
Since MPF is supposed to provide retirement benefits for your staff, you may need to consider factors comparable to firm stability, risk level of funds, miscellaneous charges and customer support when it comes to selecting your trustee.
For instance, choosing a bank is relatively low-risk while choosing an insurance agency may provide you with a more diversified funding portfolio. You may confer with the list of MPF approved trustees to help you make an informed decision.