What is the difference between ORSO & MPF?
When it comes to retirement planning in Hong Kong, employees and employers often encounter two main schemes: ORSO and MPF. Understanding the differences between these retirement plans is crucial for making informed decisions about your financial future.
Whilst both schemes serve the same fundamental purpose of providing retirement protection, they operate very differently in terms of structure, flexibility, contributions and regulations. This article breaks down the key differences between ORSO and MPF to help you understand which scheme best suits your needs.
What is ORSO?
ORSO stands for Occupational Retirement Schemes Ordinance. Established in 1993, ORSO is an employer-driven, voluntary retirement scheme that predates Hong Kong's mandatory pension system. ORSO schemes are set up voluntarily by employers to provide retirement benefits for their employees, offering significantly more flexibility and customisation than standard MPF schemes.
ORSO schemes can be structured as either defined benefit schemes (where retirement benefits are guaranteed based on factors like years of service and final salary) or defined contribution schemes (where benefits vary based on contributions and investment returns).
These schemes are typically offered by larger organisations, multinational corporations and companies seeking to provide competitive retirement benefits to attract and retain top talent. ORSO schemes are regulated by the Mandatory Provident Fund Schemes Authority (MPFA), which serves as the Registrar of Occupational Retirement Schemes.
What is MPF?
MPF stands for Mandatory Provident Fund. Launched in December 2000, MPF is Hong Kong's government-regulated, compulsory retirement savings scheme. Unlike ORSO, participation in MPF is mandatory for most employers and employees in Hong Kong.
The MPF system requires both employers and employees to contribute 5% of the employee's relevant income (subject to minimum and maximum thresholds) into approved MPF schemes. These contributions are immediately and fully vested in the employee, meaning they belong to the employee as soon as they're paid into the account.
MPF schemes offer standardised investment options with contributions invested in approved constituent funds. Generally, MPF benefits are locked in until retirement age (65 years), with limited exceptions for early withdrawal.
ORSO vs MPF: Key differences.
Participation requirements.
ORSO
Voluntary for both employers and employees. Employers decide whether to establish an ORSO scheme, and employees may choose whether to participate (depending on scheme rules).
MPF
Mandatory for all eligible employers and employees. All employees aged 18 to 64 who are employed for more than 60 days must participate unless specifically exempted.
Contribution rates.
ORSO
Flexible contribution arrangements determined by the employer and set out in the scheme rules. Contribution rates can be customised to suit company policy and employee needs, often exceeding the standard MPF rates.
MPF
Fixed at 5% for both employers and employees, based on relevant income. Contributions are capped at HK$1,500 per month per party for incomes above HK$30,000.
Investment options.
ORSO
Offers wider and more diverse investment options, including potentially higher-yielding assets. Employers can work with professional fund managers to optimise investment strategies and may offer options not available in standard MPF schemes.
MPF
Provides standardised investment options through approved constituent funds. Whilst employees can choose from different fund types, options are more limited compared to ORSO schemes.
Withdrawal flexibility.
ORSO
Allows for more flexible withdrawal options depending on the company's scheme rules. Some ORSO schemes permit withdrawals before the standard retirement age or under different circumstances.
MPF
Funds are generally locked in until retirement age (65 years), with limited exceptions such as permanent departure from Hong Kong, early retirement at 60, total incapacity or terminal illness.
Regulatory framework.
ORSO
Governed by the Occupational Retirement Schemes Ordinance (Chapter 426). MPF-exempted ORSO schemes are also subject to the Mandatory Provident Fund Schemes (Exemption) Regulation.
MPF
Regulated by the Mandatory Provident Fund Schemes Ordinance and overseen by the MPFA.
Administrative complexity.
ORSO
More complex and potentially costly to administer. Employers must manage scheme rules, annual reporting requirements and compliance with ORSO regulations. Annual fees of HK$940 apply for each registered or exempted scheme.
MPF
Easier to administer with standardised processes. Suitable for small to medium-sized enterprises with limited administrative resources. Workday's payroll solutions can help automate MPF calculations and ensure compliance.
What is an MPF-exempted ORSO scheme?
Some ORSO schemes hold special "MPF-exempted" status granted by the MPFA. This means they are exempt from standard MPF requirements, allowing them to operate under ORSO regulations whilst still providing retirement protection that meets or exceeds MPF standards.
For an ORSO scheme to obtain MPF exemption, it must meet specific criteria set by the MPFA. Employers operating MPF-exempted ORSO schemes are required to give new eligible employees a one-time option to choose between joining the MPF-exempted ORSO scheme or a standard MPF scheme.
Critical timing: Employees must notify their employer in writing of their choice within the first 30 days of employment. If no notification is provided within this period, the employee is deemed to have chosen the MPF scheme. This is a one-time decision that generally cannot be changed during employment with that employer.
For employees who join an MPF-exempted ORSO scheme after 1 December 2000 (known as "new members"), a portion of their benefits called Minimum MPF Benefits (MMB) is subject to preservation, portability and withdrawal requirements similar to MPF. Existing members who joined before 1 December 2000 are exempt from these requirements.
Tax treatment differences.
Both ORSO and MPF contributions enjoy tax benefits, though the treatment differs:
MPF mandatory
Employee deduction
Up to HK$18,000/year
Employer deduction
Up to 15% of employee's total emoluments
MPF voluntary (TVC)
Employee deduction
Up to HK$60,000/year (shared cap with QDAP)
Employer deduction
N/A (TVC is employee-directed)
ORSO
Employee deduction
Up to HK$18,000/year
Employer deduction
Up to 15% of employee's total salary
Which is better: ORSO or MPF?
There is no universally "better" option, as the choice depends on individual circumstances, employer offerings and career goals.
ORSO may be advantageous if:
- Your employer offers generous contribution rates exceeding 5%
- The scheme provides defined benefits guaranteeing retirement income
- You value investment flexibility and access to diverse fund options
- You prefer more flexible withdrawal terms
- You're a high earner and the MPF contribution cap (HK$1,500/month) feels restrictive
MPF may be preferable if:
You prioritise immediate and full vesting of all contributions
You want portability and the ability to transfer benefits between employers easily
- You prefer standardised, government-regulated protections
- Your employment is likely to change frequently
Remember, if your employer offers both an MPF-exempted ORSO scheme and MPF, you must decide within your first 30 days of employment, and this decision is typically permanent for that employment relationship.
Frequently asked questions.
Can I switch from ORSO to MPF or vice versa during my employment?
No. If your employer offers both an MPF-exempted ORSO scheme and an MPF scheme, you must choose within the first 30 days of employment. If you don't notify your employer in writing within this period, you're automatically enrolled in MPF. This is a one-time decision that generally cannot be changed whilst you remain employed with that employer. Only when you join a new employer can you make a fresh choice if they also offer both options.
What happens to my ORSO benefits when I leave my job?
This depends on when you joined the scheme and whether it's MPF-exempted. If you're a "new member" (joined after 1 December 2000) of an MPF-exempted ORSO scheme, your Minimum MPF Benefits (MMB) must be transferred to either your new employer's MPF scheme or a master trust/industry scheme of your choice. Benefits exceeding the MMB may be withdrawn or left in the scheme, depending on the scheme rules. If you joined before 1 December 2000, you have more flexibility and are exempt from preservation requirements.
Are ORSO schemes still common in Hong Kong?
ORSO schemes are less common than they were before MPF was introduced. Market data shows that the number of employers operating ORSO schemes has declined by approximately 37% over the past 20 years, from 8,800 to around 5,500. Many companies have transitioned to MPF due to its simpler administration and lower costs. However, ORSO schemes remain popular among large corporations, multinational companies and organisations seeking to offer competitive benefits packages. As of 2025, the ORSO market is valued at approximately HK$300 billion, compared to the MPF market's HK$1 trillion.
Managing retirement schemes, whether ORSO or MPF, requires careful administration and compliance with regulatory requirements. Workday's HCM solutions help Hong Kong employers streamline retirement benefit administration, ensure accurate record-keeping and maintain compliance with MPFA regulations, reducing administrative burden whilst supporting employees' long-term financial security.