What is MPF (Mandatory Provident Fund)?
The Mandatory Provident Fund is Hong Kong's compulsory retirement savings scheme, established under the Mandatory Provident Fund Schemes Ordinance. Employers and employees each contribute 5% of relevant income, capped at HKD 1,500 per month each side (based on a maximum relevant income of HKD 30,000 per month).
Current Rate (1 April to 31 March)
5% employer + 5% employee; max HKD 1,500/month each. Self-employed: 5% of relevant income.
Example
An employee earning HKD 25,000/month: employer contributes HKD 1,250/month (5%), employee contributes HKD 1,250/month (5%). An employee earning HKD 40,000/month: both parties contribute HKD 1,500/month (capped at HKD 30,000 relevant income).
How MPF (Mandatory Provident Fund) works in Hong Kong
**Background**
The MPF was established in 2000 to provide retirement protection for Hong Kong's workforce. It is administered by the Mandatory Provident Fund Schemes Authority (MPFA) and channelled through approved trustees (HSBC, AIA, Manulife, Sun Life, Principal, etc.).
**Who must enrol**
- All employees aged 18 to 64 (inclusive) working in HK for 60+ calendar days, employed for at least 60 days in a 12-month period - Exempt from enrolment: domestic workers (separate scheme), workers with other approved retirement scheme covering MPF equivalent benefit, non-HK residents working in HK for under 13 months - Self-employed persons (SEPs) aged 18-64 must also enrol and contribute based on their own relevant income
**Relevant income and caps**
- Minimum relevant income: HKD 7,100/month (employees earning below this are exempt from employee contributions but employer must still contribute) - Maximum relevant income: HKD 30,000/month (contributions capped; no contributions on income above HKD 30,000) - Monthly employer contribution cap: HKD 1,500 - Monthly employee contribution cap: HKD 1,500
**Contribution period and deadline**
MPF contributions are made monthly. The employer must remit both the employer and employee portions by the 10th day after the end of each contribution period (last working day of the month).
**Types of MPF funds**
MPF trustees offer a menu of constituent funds: conservative fund (capital preservation), bond funds, mixed asset funds, and equity funds (including HK equity, global equity, China equity). Members choose their allocation and can switch funds.
**Tax deductibility**
- Employer mandatory contributions: fully deductible against Profits Tax as a business expense - Employee mandatory contributions: eligible for tax deduction from Salaries Tax income - Tax Deductible Voluntary Contributions (TVC): employees can contribute additional amounts up to HKD 18,000/year to a TVC sub-account, deductible from Salaries Tax assessment
**Portability**
MPF accrued benefits belong to the member. On leaving an employer, the employee can transfer their accrued benefits to a personal account or their next employer's scheme. The employee's portion is always portable; the employer's contributions vest progressively (full vesting after typically the first year of employment under most schemes).
**Exemptions for small employers**
Prior to December 2000, employers with fewer than 5 employees could apply for an exemption — this has since been closed. All employers must participate regardless of size.
**Penalties**
Late or non-payment of MPF contributions results in a surcharge of 5% of the outstanding amount, plus possible criminal prosecution for persistent default (maximum fine HKD 350,000 and imprisonment).
Related terms
Salaries Tax is charged on income from employment, offices, and pensions arising in or derived from Hong Kong. Progressive rates of 2%, 6%, 10%, and 14% apply to net chargeable income. Tax is capped at 15% of net total income (standard rate), whichever produces the lower liability.
A private company limited by shares is the most common business structure in Hong Kong for foreign investors and local businesses. Incorporated under the Companies Ordinance (Cap. 622), it requires at least 1 director, 1 shareholder, and a company secretary. There is no minimum share capital. All HK private limited companies must have their accounts audited annually.
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