The Mandatory Provident Fund (MPF) is Hong Kong’s compulsory retirement savings scheme, covering employees and self-employed individuals aged 18 to 64. Established as a cornerstone of the city’s social security framework, it sets out structured obligations for employers, employees and the self-employed. A significant policy change came into effect on 1 May 2025, when the MPF offsetting arrangement was abolished, considerably strengthening retirement protections across Hong Kong’s workforce.
This guide outlines the structure of the MPF system, the scheme types available, contribution requirements, enrolment procedures and applicable exemptions.
- The MPF system comprises three scheme types – Master Trust, Employer-Sponsored and Industry Schemes – each suited to different employment structures and organisational sizes.
- Employers and employees each contribute 5% of relevant income, capped at HKD 1,500 per month for incomes exceeding HKD 30,000.
- Since 1 May 2025, employers can no longer use mandatory MPF contributions to offset severance pay or long service payments.
- Certain categories of workers are exempt from MPF participation, including domestic employees, civil servants, and non-casual employees engaged for fewer than 60 days.
What is the Mandatory Provident Fund?
The Mandatory Provident Fund is a compulsory retirement savings scheme administered under Hong Kong’s social security framework. It covers most employees and self-employed persons aged 18 to 64, with the aim of building long-term financial security for the city’s workforce. The scheme operates through approved trustees who manage contributions and invest them across a range of fund types, with the MPFA (Mandatory Provident Fund Schemes Authority) overseeing regulation and compliance.
Three types of MPF schemes
The MPF system comprises three primary scheme types, each designed for different employment structures and organisational scales. Employers select the scheme that best reflects their workforce size and industry, while employees and self-employed persons contribute within the chosen framework.
| Scheme type | Eligibility | Characteristics |
|---|---|---|
| Master Trust Schemes | Open to employees, self-employed individuals, and persons transferring accrued benefits from other schemes. Suitable for small- and medium-sized enterprises. | The most common scheme type. Pools contributions from multiple participating employers, employees, and self-employed persons to achieve economies of scale in investment and administration. |
| Employer-Sponsored Schemes | Open to employees of a single employer and associated companies. Suitable for large corporations. | Cost-effective only for organisations with a large employee base. |
| Industry Schemes | Applicable to employees in industries with high labour mobility, including catering, construction, and casual employment. | Casual employees in the catering and construction industries are not required to change schemes when changing employers, provided both employers are registered under the same industry scheme. |
Choosing an MPF scheme
Selecting an appropriate MPF scheme involves weighing factors such as company size and stability, fund risk profiles, administrative charges and the level of trustee support available. Master Trust Schemes, the most prevalent type, typically offer seven categories of constituent funds, each with a different risk profile:
- MPF Conservative Fund: Generally lower risk, focused on capital preservation.
- Money Market Fund: Invests in short-term, highly liquid instruments.
- Guaranteed Fund: Aims to provide a guaranteed return, subject to specific conditions.
- Bond Fund: Invests primarily in fixed-income securities.
- Mixed Assets Fund: A diversified portfolio combining different asset classes.
- Equity Fund: Invests mainly in stocks, with a higher risk profile.
- Index Fund: Tracks a specific market index.
Each fund type carries its own suitability criteria. Further details on fund characteristics and selection are available on the MPFA website.
Who is exempt from the MPF?
While the MPF applies to most of Hong Kong’s workforce, certain individuals fall outside its scope. Exempt categories include:
- Employees and self-employed individuals under the age of 18 or over 65.
- Domestic employees, including babysitters, domestic servants and gardeners providing services at the employer’s residence, and security guards employed by an individual for residential premises.
- Self-employed hawkers.
- Persons covered by statutory pension or provident fund schemes, such as civil servants and grant schoolteachers.
- Members of occupational retirement schemes that hold an MPF exemption certificate.
- Persons from overseas who enter Hong Kong under Section 11 of the Immigration Ordinance for employment of no more than 13 months, or who are covered by an overseas retirement scheme.
- Employees of the European Union Office of the European Commission in Hong Kong.
- Non-casual employees engaged for fewer than 60 days.
How to enrol employees
Employers are responsible for enrolling all eligible full-time and part-time employees aged 18 to 64 within 60 calendar days of the commencement of employment. The probationary period counts towards this 60-day window. Where the 60th day falls on a weekend or public holiday, the deadline extends to the following business day.
To complete enrolment, an enrolment form is submitted to the chosen trustee containing the following information:
- The MPF scheme selected.
- The employee’s personal particulars.
- Tax residency self-certification.
- The employee’s signature.
Where an employee does not complete the enrolment form, the employer remains responsible for submitting the form to the trustee before the deadline. Enrolment submitted after the 60th day may attract penalties of up to HKD 350,000 and three years’ imprisonment.
Once enrolment is approved, the trustee issues a notice of participation to the employee, confirming the scheme name, the trustee’s name and address, the scheme member’s name and the date of issue.
MPF contribution rates
Both employers and employees contribute 5% of the employee’s relevant income to the MPF scheme each month. The following rates apply based on monthly relevant income:
| Monthly relevant income (HKD) | Employer’s contribution | Employee’s contribution |
|---|---|---|
| Less than 7,100 | Relevant income x 5% | Not required |
| 7,100 – 30,000 | Relevant income x 5% | Relevant income x 5% |
| More than 30,000 | HKD 1,500 | HKD 1,500 |
When contributions begin
Contributions are due on the 10th day of the following month. New employees are subject to a contribution holiday for the first 60 days of employment. The first contribution payment falls on or before the 10th day after the end of the calendar month in which the employee’s 60th day of employment occurs.
Tax deductions on MPF contributions
Both employers and employees are eligible for tax deductions on their MPF contributions. Employers may claim a deduction for contributions made on behalf of an employee, up to a maximum of 15% of that employee’s annual income. Employees may claim deductions on their own contributions of up to HKD 18,000 per year.
Conclusion
The MPF system provides a structured framework for retirement savings in Hong Kong, with defined obligations covering contribution rates, enrolment timelines, and scheme selection. The abolition of the offsetting arrangement in May 2025 marks a meaningful shift in how the scheme protects long-term employee benefits. For employers and employees alike, understanding the applicable rules helps ensure contributions are made correctly and retirement savings remain on track.
How Acclime can help with payroll administration and MPF compliance in Hong Kong
Acclime supports businesses operating in Hong Kong with MPF enrolment, payroll administration, and ongoing compliance. Whether setting up for the first time or reviewing existing arrangements, our team can help ensure your obligations are met accurately and on time. Contact Acclime to learn more about our HR and payroll services in Hong Kong.
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