Beginner’s Guide to Mandatory Provident Fund (MPF) in Hong Kong

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Editor’s Note: ‘Beginner’s Guide to Mandatory Provident Fund (MPF) in Hong Kong‘ was written on 2 Dec 2020 by Kenneth Yeow and updated on 17 Jan 2022 by Hern Yee, Wong.

Hello there, it’s Kenneth again! I’m back with another article, this time focusing on the Mandatory Provident Fund (強制性公積金) in Hong Kong, or MPF for short. In my previous write-up, I covered the Employees’ Provident Fund in Malaysia; that included some statutory rules that Malaysian companies need to be aware of.

The Mandatory Provident Fund (MPF) is a compulsory saving scheme or pension fund meant to help support retired residents. Hence, most employees and employers are required by law to provide a monthly contribution to the various MPF schemes.

Historical Context

The MPF scheme was only implemented in 2000, following the enactment of:

  1. The Mandatory Provident Fund Schemes Ordinance in August 1995; and
  2. The Provident Fund Schemes Legislation (Amendment) Ordinance 1998 in March 1998. 

The Mandatory Provident Fund Authority (MPFA) is the governing body that oversees the provision of the various MPF schemes offered. They also ensure that there is no breach of legislation by trustees.

Employers who fail to comply with the statutory requirements will be subjected to a financial penalty. Alternatively, they may be prosecuted depending on the type of non-compliance and the corresponding severity.

More information on this can be found here

Various MPF Schemes and Fund Types

Now, let’s look at the three types of Mandatory Provident Fund Schemes that are available to choose from:

Scheme TypeParticipantsCharacteristics
Master Trust SchemesThe most common type of scheme and is open to employees of participating employers, self-employed persons and persons with accrued benefits to be transferred from other schemesPools together contributions from various employers and their employee; and contributions from self-employed persons, master trust schemes have a high degree of efficiency in terms of scheme administration due to economies of scale.
Employer-sponsored SchemesLimited to employees of a single employer and its associated companiesDue to the restriction in membership, it is only cost-effective to run an employer-sponsored scheme if the company has a large number of employees
Industry SchemesSpecially designed for employees belonging to the catering and construction industries, particularly  casual employees (i.e. workers employed on a day-to-day basis or for a fixed period of less than 60 days)Casual employees are not required to change schemes if they change jobs within the catering and construction industries so long as the previous and new employers have registered with the same Industry Scheme.

 We’ll be focusing mainly on the Master Trust Scheme as it’s the most common.

Employees can select a certain MPF fund to provide different growth rates that suit their individual risk appetite:

Fund TypeAdministrative Fees and SuitabilityFeatures
MPF Conservative Fund

Objective: To earn a rate of return similar to the Hong Kong Dollar savings rate

Financial Instruments: Short-term bank deposits and short-term bonds

Risks: Relatively low
No administrative fees can be charged by trustees if the rate of return in a particular month is lower than or equal to MPFA’s Prescribed Savings Rate for that month.

Suitability: Conservative, risk averse scheme members, especially those close to retirement
The law requires that each MPF scheme offers at a minimum an MPF Conservative Fund.

Low-risk but returns may not beat inflation and may even be negative.

Generally described as a Money Market Fund in the Fund Fact Sheet issued by trustees.
Money Market Fund

Objective: To earn a rate of return comparatively higher than that of bank deposits or short-term certificates of deposit

Financial Instruments: short-term bank deposits, government bills or commercial papers

Risks: Relatively Low
Charged as a percentage of the fund’s net asset value.

Suitability: People who are close to retirement, or low-risk bearers
Relatively stable. This type of fund can be used to manage cash that is not currently invested, while earning income generated through interest.
Guaranteed Fund

Objective: To provide a guarantee on the capital invested, or to achieve a guaranteed rate of return

Financial Instruments: Bonds, stocks or short-term, interest- bearing, money market instruments

Risks: Relatively low (but also depends on the guarantee conditions)
The guarantor usually charges a guarantee fee or reserve fee, in addition to the basic fees and charges typical of other MPF funds.

Suitability: Risk averse scheme members, especially those close to retirement who are willing to abide by the guarantee conditions
There are two major types of guarantee:  capital guarantee or return guarantee.

To qualify for the guarantee, all guarantee conditions such as minimum investment period and withdrawal requirements must be met. (Scheme members must read the terms and conditions of individual funds carefully.)
Bond Fund (Also known as Fixed income Fund)

Objective: To earn a stable income from interest and the bond coupon rate, and make profits from bond trading

Financial Instruments: Bonds

Risks: Low to Medium; those seeking a stable return over the medium-to-long term
The fee is generally a percentage of the fund’s net asset value.

Suitability: Moderately conservative scheme members with a low risk appetite, and 
The bonds must meet the minimum credit rating or listing requirements prescribed by MPFA.
Mixed Assets Fund (Also known as Stable Fund, Balanced Fund, Life-Cycle Fund, Growth Fund)

Objective: To achieve capital appreciation over the long term through investing in a combination of stocks and bonds

Financial Instruments: Stocks and Bonds

Risks: Medium to high
The fee is generally a percentage of the fund’s net asset value.

Suitability: Scheme members may adjust the proportion of stocks to bonds in their portfolios at different life stages
Different Mixed Assets Funds have different proportions of stocks and bonds.

In general, a greater proportion of stocks is associated with higher risk.
Equity Fund

Objective: To achieve capital appreciation and a return higher than inflation over the long term

Financial Instruments: Stocks

Risks: Relatively High; tolerance level, and other risk tolerant scheme members
The fee is generally a percentage of the fund’s net asset value.

Suitability: Young scheme members with a longer investment horizon and a higher risk 
There are usually three types of Equity Funds: single market, regional market or global market.

They invest mainly in stocks listed on stock exchanges approved by MPFA
Others (Index Fund)

Objective: To earn a rate of return similar to that of the market index that the fund replicates

Financial Instruments: For example: stocks
(the fund’s investment portfolio follows the weightings of the constituent stocks of the market index that it replicates)

Risks: Medium to High
As the constituent stocks of the relevant index are bought and sold within the fund in accordance with their respective weightings in the index, this would result in less frequent trading which translates to lower fees & charges than other fundsThe investment of the fund is limited to the constituent stocks of the market index that it replicates, so the fund performance is largely in line with the underlying market index.

Exemptions from the MPF contribution

Even with all these various schemes and types of funds, there are some employees who will be exempt from the Mandatory Provident Fund. 

These are:
  1. Employees and self-employed persons who are 64 years old before 1st Dec 2000;
  2. Domestic employees;
  3. Self-employed hawkers;
  4. People covered by a statutory pension or provident fund schemes, such as civil servants and subsidized or grant school teachers;
  5. Members of occupational retirement schemes which are granted exemption certificates;
  6. People from overseas who enter Hong Kong for employment or self-employment for not more than 13 months;
  7. People from overseas who enter Hong Kong for employment or self-employment and who are covered by overseas retirement schemes; and
  8. Employees of the European Union Office of the European Commission in Hong Kong.

Enrolment Deadline and Procedures

You will need to enrol Full-time and Part-time employees within age 18 to 65 within their first 60 days of employment.

Do note that the 60-day employment rules refer to the duration of the employment relationship with the new hire. Hence, it is not the number of working days effected. Should the employment of the employee end prior to the 60th day of employment, you won’t have to enrol the employee into an Mandatory Provident Fund scheme at all. 

What if the 60th day of employment falls on a Saturday, Sunday, a public holiday, a gale warning day or a black rainstorm warning day?

The enrolment deadline will then extend to end on the following day; this doesn’t include any of the pre-mentioned days.

For example, Chloe is a newly-employed executive in your company. Her first day of employment is 15th October 2021 (Thursday). You will have to enrol her into the MPF Scheme by 14th December 2021 (Tuesday); that will be the 60th calendar day from her first day of employment.

What if Chloe’s first day of employment falls on 20th October 2021 (Tuesday)? The deadline to enrol would then be 21st December 2021 instead of 19th December 2021. That’s because the 19th and 20th of December 2021 falls on a Saturday and Sunday respectively.

What if there’s a probationary period for new employees (usually 3 months or 90 days)?

The 60-day employment and enrolment ruling still holds. As the employer, you will need to enrol the employee by the 60th day. 

To enrol an employee, you will have to provide an enrolment form for the selected MPF scheme that your company is participating in. Thereafter, the employee will need to:

  • Indicate their chosen investment portfolio,
  • Provide personal particulars, and
  • Provide a self-certification which includes tax residency (i.e. declaring whether he/she is a tax resident outside Hong Kong).

Then, you will need to return the completed form to your trustee to arrange for your employee’s MPF account set-up.

In the event that your employee refuses to cooperate

What if your employee does not complete the enrolment form? You will still need to submit the incomplete enrolment form to your trustee before the deadline. This is to ensure that your obligation as an employer has been fulfilled.

Contribution Rates

So now that you’ve enrolled your employee in his or her MPF scheme, let’s look at the rates of contribution. Employers and employees each need to make regular mandatory contributions of 5% of the employee’s relevant income to an MPF scheme. This is subjected to the minimum and maximum relevant income levels.

The contribution rates can be divided into 3 categories:

Monthly Relevant IncomeEmployer’s Contribution Employee’s Contribution
Less than $7,100 HKDRelevant Income * 5%Not Required
$7,100 HKD – $30,000 HKDRelevant Income * 5%Relevant Income * 5%
More than $30,000 HKD$1,500 HKD$1,500 HKD

Here are two examples on how the calculation works:

Example 1:

Chloe is a newly-hired employee that’s earning $25,000 HKD a month. Based on her salary, she will need to contribute 5% of her salary. Hence, her Employee MPF Contribution will be $1,250 HKD.

Her employer will also need to make the Employer MPF Contribution for her. In this case, it will also be 5% of her salary (i.e. $1,250 HKD).

Example 2:

Nicholas is a senior employee that’s earning $60,000 HKD a month. Based on his salary, as it’s more than $30,000 HKD, his Employee MPF Contribution will be $1,500 HKD. Likewise, the Employer MPF Contribution will be $1,500 HKD as well.

Voluntary Contribution

Some employees and employers may feel that a maximum mandatory contribution of 5% of their monthly income or $1,500HKD may be too little for a retirement scheme. Therefore, they may want to voluntarily contribute more.

Unlike mandatory contributions, voluntary contributions are often determined and defined based on the rules of the enrolled scheme. Employers should consult their MPF trustees regarding the details of making voluntary contributions under your chosen scheme.

Once an agreement has been settled, both employees and employers can agree to make voluntary contributions. This can be based on either their gross or net salary (after the mandatory contributions have been made).

Example of Voluntary Contribution on Gross Income

Chloe’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 her gross monthly income.

Assuming Chloe earns $30,000 HKD and her employer is already making a mandatory contribution of $1,500 HKD, the Employer Voluntary Contribution will also be $1,500 HKD. 

Example of Voluntary Contribution on Net Income

Nicholas’ employer has also 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 net income.

Let’s assume after mandatory contributions, Nicholas earns $55,000 HKD. The employer will have to make a voluntary contribution of $2,750 HKD (55,000 * 5% = 2,750). If Nicholas also makes an Employee Voluntary Contribution of 5% of his net salary, he will make a voluntary contribution of $2,750 HKD as well. His final net salary will then be $52,250 HKD. 

Do note that the cases presented above are examples of simple voluntary contributions. There will be cases where both parties may have an agreement to provide a mix of percentage-based or fixed-sum voluntary contributions depending on the situation.

Contribution Holiday

New hires who have not been employed for 60 days or more will be under a Contribution Holiday. In this case, they won’t need to make mandatory MPF contributions). According to MPFA, the first contribution should be paid to the trustee on or before the 10th day after the last day of the calendar month on which the 60th day of employment falls. 

Sounds confusing? We got you covered with examples and explanations. 


Take for instance Nicholas, a newly hired employee who joined your company on 5th September 2021. 

Nicholas’ employer must begin their Employer Contribution from the wage period he joins. Assuming a 60-day MPF Contribution Holiday, the employer will then have to make their first Employer Mandatory MPF Contribution for Nicholas by the 10th of December 2021.

However for Nicholas, as he joined on 5th September, he doesn’t have to make any employee contributions for the first 30 days of his employment plus the first incomplete wage period. By and large for most companies, the period usually covers nearly up to 60 days, hence the common term “60-day MPF Contribution Holiday” that you usually come across. After the contribution holiday ends, Nicholas will then have to contribute Employee MPF for the first time in the subsequent month  by 10th December 2021.

Making Contributions on Time for Employees

We’re almost at the end! Now that you have a clear understanding of the contribution rates and contribution holiday, you’d noticed that I mentioned making the contributions by the 10th day of the following month. An employer has to pay the mandatory contributions for monthly-paid regular employees on the 10th day of each month. If the contribution day is a Saturday, Sunday, public holiday, a gale warning day or a black rainstorm warning day, the contribution day will extend to the next following day which isn’t any of the aforementioned days. 

Here is a link to the MPF Contribution Calendar for 2020 and 2021. You can also check out the MPF Contribution Calendar link for 2022 here. You will see the allotted contribution dates that you as an employer, are supposed to make the contribution dates by. 

Cessation of Employment

When an employee ceases employment with the company either through resignation or termination, there are a few things that the employer needs to do. The first would be to arrange for a final contribution and the second would be to notify the trustee about the cessation of employment.

Final Contribution:

As per MPFA requirements, you also need to arrange for a final mandatory MPF contribution for the departing employee. That should be made together with those of other employees on or before the contribution deadline of the following month. 

Notice of Termination:

Due to MPFA requirements, if your employee is leaving the company, it’s important that you notify your trustee promptly so that the account records of the employee can be updated. After all, you want your company avoid being treated as a defaulter and prevent repercussions in future. 

There are 2 ways of notifying your trustee of a departing employee.

  1. The first is to use the remittance statement to report the termination of the employment. In this case, do fill in the required sections and issue the remittance statement along with your mandatory contributions. The deadline to notify your trustee will be the 10th day of the following month.
  2. You can also provide written notice to the trustee. Some trustees have a “Notice of Termination” form for you to use. All in all, check with your trustee on the best method to utilise for cases like these.


And that’s it! I hope you walk away from this article knowing much more about the various schemes offered and the way MPF works.

If you’re still scratching your head and wondering how you’re going to manually calculate all your employees’ MPF contributions and keep track of them, why not give Talenox a try? After all, we automate your MPF calculations and make payroll processing a breeze from month to month. You’ll reduce all that time spent on payroll calculations, and can focus that time on the things that truly matter. 🙂

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