What is MPF in Hong Kong?
The Mandatory Provident Fund (MPF) is Hong Kong's compulsory retirement savings scheme designed to provide financial security for the working population after retirement. Introduced in December 2000, the MPF system is a cornerstone of Hong Kong's retirement protection framework, covering employees, self-employed individuals and ensuring that workers can accumulate savings throughout their careers.
Understanding MPF is essential for both employers and employees in Hong Kong. For employers, compliance with MPF regulations is a legal obligation that carries significant penalties for non-compliance. For employees, MPF represents their primary retirement savings vehicle and a crucial part of their long-term financial planning.
This article explains what MPF is, how it works, who needs to contribute, and the recent changes that affect both employers and employees in 2025.
What does MPF stand for?
MPF stands for Mandatory Provident Fund. It is a privately managed, fully funded contribution system overseen by the Mandatory Provident Fund Schemes Authority (MPFA), a statutory body established to regulate and supervise the MPF system in Hong Kong.
The scheme was introduced to address Hong Kong's ageing population and ensure that workers have adequate retirement savings. According to the Census and Statistics Department, the ratio of working-age adults to retirees is projected to fall from 3.3 in 2021 to just 1.6 by 2046, making the MPF system increasingly vital for Hong Kong's long-term financial stability.
Who needs to contribute to MPF?
The MPF system covers most workers in Hong Kong. Both full-time and part-time employees aged between 18 and 64 must be enrolled in an MPF scheme if they have been employed for 60 days or more. Self-employed individuals within the same age range are also required to contribute to MPF.
However, certain categories of workers are exempt from MPF requirements:
- Civil servants, judicial officers and subsidised school teachers covered by statutory pension or provident fund schemes
- Members of occupational retirement schemes regulated under the Occupational Retirement Schemes Ordinance (ORSO) who have been granted MPF exemption certificates
- Expatriates employed in Hong Kong for 13 months or less, or those covered by overseas retirement schemes
- Employees of the European Union Office of the European Commission in Hong Kong
- Domestic helpers and self-employed hawkers
How much do you contribute to MPF?
Both employers and employees are required to contribute 5% of the employee's relevant income to the MPF scheme. Contributions are subject to minimum and maximum income levels:
Minimum relevant income: HK$7,100 per month
- If an employee earns less than HK$7,100 per month, only the employer is required to contribute 5%
- The employee is exempt from making contributions
Maximum relevant income: HK$30,000 per month
- The maximum monthly contribution is capped at HK$1,500 per party (employer and employee)
- Even if an employee earns HK$50,000 or HK$100,000 per month, the maximum contribution remains HK$1,500 from each party
For self-employed individuals, the contribution rate is also 5% of assessable income, with a maximum annual contribution of HK$18,000 (HK$1,500 × 12 months).
What is relevant income for MPF?
Relevant income includes most forms of employment remuneration, such as:
- Basic salary and wages
- Commissions and bonuses
- Overtime pay
- Leave pay (annual leave, sick leave, long service leave)
- Allowances (housing, travel, meal allowances)
- Gratuities and tips distributed by the employer
- 13th-month payments or double pay
It's important to note that whilst employers calculate MPF based on relevant income, certain discretionary bonuses may not be included depending on how they're structured in the employment contract.
When do MPF contributions need to be paid?
Employers must remit MPF contributions to the scheme trustee by the 10th day of each month following the contribution period. For monthly-paid employees, the contribution period is typically the calendar month.
If the 10th falls on a Saturday, Sunday, public holiday or a day when the eMPF Platform is suspended, the deadline is extended to the next working day.
Important timing rules for new employees:
- Employers must enroll eligible employees in an MPF scheme within 60 days of their employment start date
- The employer's contribution obligation begins from the employee's first day of employment
- Employees enjoy a "contribution holiday" for the first 30 days of employment plus any incomplete wage period that follows
The first MPF payment (covering the employer's contributions and any employee contributions after the holiday period) is due on the 10th of the month following the 60-day enrollment period
What are the types of MPF schemes?
Hong Kong offers three main types of MPF schemes:
Master Trust Schemes: The most common option, particularly for small to medium-sized businesses. These schemes pool contributions from multiple employers and offer a wide range of investment options. They're open to employees, self-employed individuals and those making voluntary contributions.
Employer-Sponsored Schemes: Designed for larger corporations with many employees. These schemes are exclusive to a specific employer's workforce and may offer fewer fund options but provide greater control over management and costs.
Industry Schemes: Specifically for casual workers in high-mobility sectors like construction and catering. These schemes allow employees to maintain the same MPF account across different employers, with contributions required from the first day of employment.
What changed on 1 May 2025?
A major reform to Hong Kong's MPF system took effect on 1 May 2025: the abolition of the MPF offsetting mechanism.
Previously, employers could use their mandatory MPF contributions to offset statutory severance payments (SP) or long service payments (LSP) when employees left the company. This meant that part of an employee's retirement savings could be used to cover termination benefits.
From 1 May 2025, this is no longer permitted. Employers must now pay severance and long service payments in full, separate from MPF contributions. This change protects employees' retirement savings and ensures they receive full benefits upon termination.
Transitional arrangements: For employees whose employment began before 1 May 2025 but ends after this date, employers can still offset SP/LSP using MPF contributions made for the service period before 1 May 2025.
To help businesses adapt, the Hong Kong government has introduced a 25-year subsidy scheme (2025-2050) that shares the cost of post-transition SP/LSP payments, with the subsidy ratio gradually decreasing over time.
What are the penalties for MPF non-compliance?
The MPFA enforces strict compliance with MPF regulations, and penalties for non-compliance are severe:
Failure to enroll eligible employees: Up to HK$350,000 fine and 3 years' imprisonment
Deducting contributions but failing to remit to trustees: Up to HK$450,000 fine and 4 years' imprisonment
Late or incomplete contributions: 5% surcharge on outstanding amounts, plus a fine of the higher of HK$5,000 or 10% of the shortfall
Repeated breaches: Fines can rise to HK$20,000
- Failure to notify trustees of employment termination: HK$5,000 for the first offense, up to HK$20,000 for subsequent offenses
Providing false or misleading information: Up to HK$100,000 fine and 1 year imprisonment for the first offense
The MPFA actively monitors compliance through investigations and workplace inspections. Additionally, the Labour Department has been issuing hundreds of thousands of default notices to non-compliant employers in recent years.
Can you withdraw MPF early?
Generally, MPF benefits are not accessible until you reach the statutory retirement age of 65 years. However, early withdrawal is permitted under specific circumstances:
Permanent departure from Hong Kong (with a statutory declaration that you will not return for work or residence)
Early retirement at age 60
Total incapacity (unable to perform work due to disability)
Terminal illness
Small balance (less than HK$5,000 with no contributions in the past 12 months)
Death (benefits payable to estate)
Unauthorised early withdrawals are prohibited and may result in penalties or criminal charges.
Frequently asked questions.
Do I need to contribute to MPF during my first 30 days of employment?
Employees enjoy a "contribution holiday" for the first 30 days of employment, plus any incomplete wage period immediately following. This means you typically won't need to make employee contributions until after your first full month of employment. However, employers must contribute from your first day of work.
What happens to my MPF if I change jobs?
When you change employers, you have several options for your MPF account. You can leave the accrued benefits with your previous employer's MPF scheme, transfer them to your new employer's scheme, or consolidate them into a personal account. The choice is yours, though consolidating multiple MPF accounts can make management easier and reduce administrative paperwork.
Can my employer make voluntary MPF contributions on top of mandatory contributions?
Yes, employers can make voluntary contributions beyond the mandatory 5%. These voluntary contributions can be a valuable employee benefit and help attract and retain talent in Hong Kong's competitive labour market. Importantly, whilst mandatory contributions can no longer be used to offset severance or long service payments (from 1 May 2025), voluntary contributions can still be used for this purpose.
Managing MPF compliance requires accurate payroll processing, timely remittances and proper record-keeping. Workday's payroll solutions help Hong Kong employers automate MPF calculations, ensure timely contributions and maintain compliance with MPFA regulations, reducing the risk of costly penalties whilst supporting your employees' retirement planning.