Crowned as Asia’s premier monetary hub, Hong Kong is a well-liked business destination. As a new employer in Hong Kong, that you must be aware of various laws and schemes – especially the Obligatory Provident Fund (MPF) – before you kickstart your hiring process. Along the way, ought to you’ve got any questions regarding MPF, drop us a chat and our professional accountants in Hong Kong will assist you. Let’s get you started with our guide to MPF in Hong Kong.
What’s MPF in Hong Kong?
MPF stands for Mandatory Provident Fund, which is a obligatory financial savings scheme that covers all workers and self-employed persons aged 18-64 in Hong Kong. You may think of it as a safety net for retirement.
The Obligatory Provident Fund Schemes Ordinance (MPFSO) was initiated by the Hong Kong authorities in response to the quickly ageing workdrive back in 1995. The MPFSO creates the framework for implementing employment-associated MPF schemes for workers within the labour power to receive monetary benefits once they retire.
Following the move, the Mandatory Provident Fund Schemes Writerity (MPFA) was set up in 1998 to administer the operation of the MPF System which was finally launched in 2000. As of 2015, over 85% of the labour force in Hong Kong was safeguarded with some type of retirement protection compared to only 33% in 2000.
Now that you have a fundamental understanding of MPF, let’s deep dive into your must do’s (additionally known as your legal 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 totally 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 commonest type of MPF scheme. It operates by pooling collectively contributions from different participating employers and their workers, as well as self-employed persons, to achieve economies of scale in investments. It is open to workers whose employers are participating in the Master Trust Scheme, as well as self-employed individuals and persons with accrued benefits, like sick pay and personal break day, to be transferred from different schemes.
The Employer-sponsored Scheme, however, is limited to staff of a single employer and its affiliated companies. Resulting from membership restriction, the scheme is more price-efficient for big corporations.
Business Scheme is only applicable for employees where labour mobility is high, especially within the catering and development industries, and particularly casual employees (hired for short-term engagement of less than 60 days or on an ad-hoc basis). Casual staff will not be required to vary schemes once they change jobs so long as they continue to be in these industries, provided the old and new employers have registered under the identical trade scheme.
How to choose which MPF scheme is greatest for you
Since MPF is supposed to provide retirement benefits for your employees, you may need to consider factors reminiscent of firm stability, risk stage of funds, miscellaneous charges and customer support when it comes to choosing your trustee.
As an example, choosing a bank is comparatively low-risk while choosing an insurance agency could provide you with a more diversified investment portfolio. You may check with the list of MPF approved trustees to help you make an informed decision.
In the event you loved this post and you would like to receive more info concerning mpf mandatory contribution i implore you to visit the internet site.