Complete MPF Guide Hong Kong 2025: Offset Abolition, Rates & Calculator

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Editor’s Note: This post has been updated with the latest statutory labour laws as of 2025. 

Hey there! If you’re dealing with MPF in Hong Kong, you’ve probably heard the buzz about some major changes happening this year. We’ve been helping companies navigate these waters for years (we do some HR outsourcing too), and let me tell you – 2025 has been quite the game-changer for the Mandatory Provident Fund (MPF) system.

The biggest news? The government finally pulled the plug on the MPF offset mechanism in May 2025. I know, I know – it sounds complicated, but stick with me. By the end of this guide, you’ll have everything you need to handle MPF Hong Kong 2025 like a pro, whether you’re an HR manager, business owner, or just someone trying to understand how this affects your company.

The Big 2025 Change: MPF Offset Abolition

Alright, let’s dive straight into the elephant in the room. Effective May 1, 2025, Hong Kong said goodbye to one of the most controversial aspects of the MPF system – the ability for employers to use MPF contributions to reduce severance payments. This is honestly the biggest shake-up I’ve seen in the 25 years since MPF started.

A Real Example to Make This Clear

Let’s say you hired someone back in January 2024, and unfortunately had to let them go in January 2027 after 3 years of service. Here’s how the math works:

Total service period: 36 months

• Service before May 1, 2025: 16 months (old offset rules apply)
• Service after May 1, 2025: 20 months (no offset allowed)

If their severance payment works out to $50,000 total, you’d calculate it like this:

• Offset portion (16/36 months): $22,222 – you can still use MPF offset here
• Full payment portion (20/36 months): $27,778 – this comes straight out of your pocket

I know it sounds complex, but once you get the hang of it, it becomes second nature. Don’t worry!

MPF Basics You Need to Know

The Mandatory Provident Fund (MPF) has been Hong Kong’s retirement savings backbone since 2000. Think of it as a forced savings account that both you and your employees contribute to, managed by professional trustees and regulated by the MPFA (that’s the Mandatory Provident Fund Authority for those keeping track).

Who’s Running the Show

The MPFA keeps everyone honest in this system. They make sure trustees don’t go rogue and that employers like you follow the rules. Trust me, you don’t want to get on their bad side – the penalties can be pretty hefty, and in serious cases, they’ll even take you to court.

Who Needs to Join the MPF Party

If you’ve got employees between 18 and 65, they’re in. Self-employed folks in that age range need to join too. As the employer, you’re automatically part of the system once you hire eligible staff.

The Lucky Few Who Get to Skip MPF

There are still some people who don’t need to worry about MPF contributions. This includes domestic helpers, self-employed street hawkers, civil servants who already have their own pension schemes, and overseas workers who are only here short-term (less than 13 months). If you’ve got employees in these categories, you can breathe a little easier on the MPF front.

Choosing the Right MPF Scheme

Now, here’s where it gets interesting. You’ve got three main types of MPF schemes to choose from, and honestly, most companies end up with the first option I’m about to tell you about.

Master Trust Schemes – The Popular Choice

This is where about 90% of companies end up, and for good reason. Master Trust Schemes are like joining a big club – your employees get pooled together with workers from hundreds of other companies. The beauty of this setup is that the administrative costs get spread out, so everyone pays less in fees. Plus, these schemes usually offer the widest range of investment options.

Employer-Sponsored Schemes – For the Big Players

If you’re running a large corporation with 500+ employees, you might want to consider setting up your own scheme. It’s like having a private club instead of joining the public one. You get more control over investment options and can customise things to fit your company culture. But honestly, unless you’ve got serious numbers, the costs probably aren’t worth it.

Industry Schemes – Built for Flexibility

Here’s something cool – if you’re in the catering or construction business, there are special industry schemes designed just for you. These are perfect if you’ve got workers jumping between different companies within your industry. Instead of having to switch schemes every time they change jobs, they can stay put. It’s a real time-saver for everyone involved.

Understanding Your Investment Options

Once you’ve picked your scheme, your employees need to decide where their money actually goes. This is where things get personal because everyone’s got different comfort levels with risk. Let me walk you through the options from safest to most adventurous.

Playing It Safe (Not for Risk Takers!)

MPF Conservative Funds are for people who hate surprises with their money. These funds stick to bank deposits and short-term government bonds. The returns are pretty modest (i.e. low) – usually just keeping up with savings account rates – but you’re not going to lose sleep over market crashes. There’s even a nice feature where if the fund doesn’t beat the government’s prescribed savings rate in any month, they can’t charge management fees.

Money Market Funds are like the MPF Conservative Fund’s slightly more ambitious cousin. They venture into commercial papers and government bills, aiming to beat regular bank deposit rates. Still pretty safe, but with a bit more potential upside.

The Middle Ground

Bond Funds focus on lending money to governments and big corporations through bonds. They’re looking for steady income from interest payments, and while there’s a bit more risk than money market funds, they’re still relatively stable. Think of them as the dependable middle child of the investment family.

Mixed Assets Funds are where things get interesting. These funds split their money between stocks and bonds, adjusting the mix based on market conditions and the fund’s strategy. Some lean more conservative (more bonds), others get more aggressive (more stocks). It’s like having a professional DJ mixing your investment playlist. 

For the Risk-Takers

Equity Funds are all about stocks. They’re hunting for companies that’ll grow over time, which means higher potential returns but also higher potential losses. These come in different flavours – some focus on Hong Kong, others look regionally or globally. If your employees are young with decades until retirement, this might be their sweet spot. 

Index Funds take a “if you can’t beat them, join them” approach. Instead of trying to pick winning stocks, they just buy a bit of everything in a market index. The cool thing is they usually charge lower fees since there’s less active management involved. I’m personally more of a risk-taker so I’d invest in Index Funds. However, as the wise saying goes, please DYODD (do your own due diligence), as my opinion isn’t a professional one.

Getting Those Contribution Rates Right

Here’s the part that hits your budget directly. Both you and your employees contribute 5% of relevant income to MPF, but there are some important caps and floors you need to know about.

Monthly Income (HKD)	What You Pay (Employer’s Contribution)	What They Pay (Employee’s Contribution)
Less than $7,100 HKD	5% of their income	Nothing (you cover it)
$7,100 HKD – $30,000 HKD	5% of their income	5% of their income
More than $30,000 HKD	$1,500 HKD max	$1,500 HKD max

Let Me Show You How This Works

Example 1:

Terence from accounting makes $25,000 a month. Both of you contribute $1,250 each (that’s $25,000 × 5%). Pretty straightforward.

Example 2:

Kuan the senior manager pulls in $60,000 monthly. Even though 5% would be $3,000, you both hit the cap at $1,500 each. The government figured there should be a limit to how much goes into MPF.

Example 3:

Jenny the intern earns $6,000 per month. Here’s where it gets interesting – she doesn’t pay anything into MPF because she’s below the $7,100 threshold, but you still need to contribute $300 (that’s $6,000 × 5%) on her behalf.

Going Above and Beyond with Voluntary Contributions

Some companies want to do more than the minimum, and that’s where voluntary MPF contributions come in. You and your employees can agree to contribute extra amounts beyond the mandatory 5%. This could be a fixed dollar amount each month, or an additional percentage of salary.

The nice thing about voluntary employee contributions is they might qualify for tax deductions up to $60,000 annually. It’s like the government saying “thanks for saving extra for retirement, here’s a little tax break.”

Example of Voluntary Contribution on Gross Income

Gary’s employer has decided to go the extra mile and provide voluntary contributions. Based on their decisions, they have decided to make a voluntary contribution of 5% based on his gross monthly income.

Assuming Gary earns $30,000 HKD and his employer is already making a mandatory contribution of $1,500 HKD, the voluntary contribution amount will also be $1,500 HKD. 

The Enrolment Process Made Simple

Getting new employees set up with MPF isn’t rocket science, but there are some important timelines you can’t mess around with. You’ve got 60 calendar days from their first day to get them enrolled. Notice I said calendar days, not working days – weekends and holidays count.

Here’s How the Timeline Works

Let’s say someone starts on Monday, October 1st. You need to have them enrolled by November 30th (that’s the 60th day counting from October 1st). If November 30th happens to fall on a weekend or public holiday, you get until the next business day.

One thing that trips up a lot of employers – this 60-day rule applies even if you have a 3-month probation period. The probation doesn’t pause the MPF clock, so don’t wait until probation ends to start the enrolment process.

The Actual Enrolment Steps

Step one is giving your new hire the enrolment form from your chosen MPF scheme.

Step two is getting them to fill out their personal details, pick their investment mix, and complete a tax residency declaration (yes, this is required even for Hong Kong residents).

Step three is submitting everything to your MPF trustee so they can set up the account. The whole process usually takes a couple of weeks once you submit the paperwork.

When Employees Don’t Cooperate

What if you hired someone who’s just really un-collaborative? Maybe they’re confused, maybe they’re just being difficult – it happens. Don’t fret: you still need to submit whatever you have to the trustee before that 60-day deadline hits. Document that the employee didn’t cooperate, and submit the incomplete form. This covers you from a compliance perspective, and the trustee will set up a default account for them.

Keeping Up with Monthly Contributions

MPF payments are due by the 10th of each month for the previous month’s contributions. So October’s contributions are due by November 10th. If the 10th falls on a weekend, public holiday, or one of those crazy typhoon days Hong Kong gets, the deadline shifts to the next business day.

The Contribution Holiday Period

Here’s something nice for new employees – they get what’s called a contribution holiday for roughly their first 60 days. During this time, you as the employer start contributing right away (from their first pay period), but they don’t have to chip in until after the holiday period ends.

The timing works like this: if someone starts September 5th, your first contribution for them is due by October 10th, but their first personal contribution isn’t due until December 10th.

Staying Organised with Contribution Deadlines

I always recommend keeping a simple calendar with contribution deadlines marked out (or you can also set reminders on your trusty phone, or even schedule email reminders to yourself). The MPFA publishes an annual contribution calendar that takes into account weekends and public holidays. It’s a lifesaver for staying on top of things, especially during busy periods when it’s easy to lose track of dates.

What Happens When Employees Leave Your Company?

With the 2025 MPF offset abolition, handling employee departures has gotten more complex, but let me break it down for you.

Your Final Contribution Obligations

When someone leaves, you need to make their final MPF contribution by the 10th of the following month, just like your regular monthly contributions. So if Terence from accounting resigns on September 15th, his final contribution goes in with everyone else’s by October 10th.

Notifying Your MPF Trustee

You’ve got two ways to let your trustee know someone’s left.

1. The easier way is to just mark it on your regular monthly remittance statement – there’s usually a section for employee departures. Submit this along with your normal contributions by the 10th of the following month.
2. The other option is to fill out a separate “Notice of Termination” form that most trustees provide. Some prefer this method, so check with yours to see what they like.

What Happens to Their MPF Money

Once someone leaves, their MPF money doesn’t just disappear. They can leave it where it is, transfer it to their new employer’s scheme, or consolidate multiple accounts if they’ve job-hopped around Hong Kong. The money stays locked up until they hit 65 (with some early withdrawal exceptions for things like permanent departure from Hong Kong or terminal illness).

2025 MPF Performance Update

Since we’re talking about 2025, let me give you the latest numbers. MPF schemes averaged 8.3% returns in 2024 – the best performance in four years! US equity funds were the stars of the show with median returns around 21.8%, while global bond funds struggled at -2.7%.

If you’re curious about market leaders, Manulife sits at the top with about 28% of total MPF assets, followed by HSBC at 18%. These numbers matter because larger providers often have more resources for member services and technology platforms.

Your MPF Compliance Checklist

In case you fell asleep halfway reading the article, read this. It’s a quick rundown of the key things you need to know and do:

• For new hires: Get them enrolled within 60 days, make sure they pick their investment options, and start your contributions from day one.
• Monthly tasks: Submit contributions by the 10th, keep accurate payroll records, and stay current with any employee changes.
• When people leave: Make final contributions on time, notify your trustee promptly, and remember that severance calculations are different now for post-May 2025 employment periods.
• Big picture stuff: Review your scheme choice annually, keep up with MPFA regulatory updates, and consider whether voluntary contributions make sense for your company culture.

Wrapping This All Up

Look, I’ll be honest – the MPF system in  Hong Kong has gotten more complex with the 2025 changes, especially the offset abolition. But it’s not insurmountable. The key is understanding that you now need to budget separately for MPF contributions and severance payments, and being proactive about staying compliant.

For employers, this means revisiting your HR budgets and making sure your payroll systems can handle the new calculation methods. For employees, it’s about understanding your investment options and maybe considering voluntary contributions if you want to boost your retirement savings.

The one constant in all of this? Things will keep evolving. Hong Kong’s retirement system is still maturing, and I expect we’ll see more changes in the coming years. The best thing you can do is stay informed and work with good systems and advisors who can help you navigate whatever comes next.

Make Your MPF Management Effortless

Honestly, keeping up with all these MPF calculations and compliance requirements can be a real headache, especially with the new 2025 offset rules. That’s where Talenox’s Hong Kong payroll software comes in handy.

The system automatically handles accurate MPF calculations with the updated 2025 rules, manages offset abolition compliance for employees with mixed service periods, automates contribution submissions to MPF trustees, and provides comprehensive reporting for audit purposes. Plus, it integrates seamlessly with Hong Kong employment law requirements.

Ready to simplify your MPF management? Get a free online demo and let Talenox handle the complexity while you focus on what really matters – growing your business.

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This guide provides general information about MPF in Hong Kong based on current regulations. Every situation is different, so for specific advice, it’s always smart to consult with qualified legal or financial professionals. And remember, MPF rules can change – always double-check the latest MPFA guidelines for the most current requirements.