MPF in Hong Kong: Employer Guide to Retirement Contributions

Hong Kong’s MPF is a mandatory savings system for employees. It is a core payroll obligation that affects your payroll costs, taxes, and workforce management tasks like recordkeeping and offboarding.

Since its launch, MPF has safeguarded employees’ long-term financial security. But mistakes can do more than threaten your team’s future. They can bring heavy fines, jail term, and reputational harm.

To minimize risk and manage your workforce smoothly, you need a clear understanding of MPF and reliable support from local payroll experts.

That’s where Deel steps in. As a global payroll provider with in-house engines and local experts across Hong Kong and 130+ countries, we monitor MPF rules, automate contributions and filings, and keep your business compliant without manual work or delays.

In this guide, we walk you through:

• Who must join the MPF system
• How to calculate and submit MPF contributions
• Recent regulatory changes and what they mean for employers
• How to enroll employees and stay compliant throughout the employment lifecycle
• The consequences of non-compliance
• The impact of MPF on your taxes

What is MPF in Hong Kong?

The mandatory provident fund in Hong Kong is a structured savings scheme. Its primary purpose is to provide self-employed and employed persons with financial security after retirement, currently set at age 65.

The MPF system came into effect on December 1, 2000 as part of Hong Kong’s multi-pillar retirement protection framework. It was introduced to address the challenges posed by the city’s aging population.

According to the Census and Statistics Department, there were about 3.3 working-age adults per retiree in 2021—a ratio projected to fall to just 1.6 by 2046. Without a formal retirement savings system, the shrinking working-age population would struggle to support the growing number of elderly residents.

Who must participate in MPF?

Participation in the MPF system is mandatory for:

• Employees, both regular and casual employees
• Employers, who must enroll employees and contribute on their behalf
• Self-employed individuals, like freelancers and sole proprietors

When can employees make MPF withdrawals?

Scheme members can withdraw their savings at age 65 through a lump sum or installments. They can also choose to keep the funds invested.

Early withdrawal is allowed only under specific conditions:

• Early retirement at age 60 or older
• Permanent departure from Hong Kong
• Total incapacity
• Terminal illness
• Having an MPF balance of HKD 5,000 or less, with no contributions made in the past 12 months, and a declared intention not to become employed or self-employed again
• Death of the scheme member, in which case the personal representative or the Official Administrator may apply for withdrawal

Unauthorized early withdrawals are prohibited and may lead to penalties or criminal charges.

2025 updates to MPF in Hong Kong

Two significant reforms to Hong Kong’s MPF system are underway that will impact how you manage long-term employee benefits. These changes aim to protect workers' retirement savings and modernize MPF administration.

1. End of MPF offsetting

You can no longer use your employer portion of MPF contributions to offset statutory severance or long service payments (SP/LSP). Going forward, employees will keep their full MPF balances and still be entitled to the full SP/LSP amount.

However, you can still offset SP/LSP using MPF contributions made before May 1, 2025, for service accrued up to that date.

To ease the financial impact on your business, the Hong Kong government has introduced a 25-year subsidy scheme that runs from 2025 to 2050. You may claim up to HKD 500,000 per year to cover post-transition SP/LSP costs.

This subsidy is subject to a cost-sharing ratio between you and the government, along with a cap per employee. Both will gradually decrease over the 25-year period.

2. Full eMPF platform rollout

The eMPF platform, launched in June 2024, is designed to simplify and centralize MPF administration. All MPF schemes must migrate by the end of 2025.

However, using the eMPF system is optional. You can still manage MPF with paper forms if you prefer.

What are the types of MPF schemes?

The type of MPF scheme you choose depends on your company’s size, structure, and workforce needs. Hong Kong offers three main types of MPF schemes:

Master trust schemes

Master trust schemes are Hong Kong’s most common MPF option, pooling contributions from diverse participants across multiple employers and employment types.

They are open to the public, which prompts trustees to offer a broad selection of fund options to meet the diverse needs of participants. This makes them ideal for small and medium-sized businesses.

Employer-sponsored schemes

Employer-sponsored schemes allow larger corporations with many participants to create their own MPF plans exclusively for employees. While they may offer fewer fund options than master trust schemes, they provide greater control over management and costs.

Industry schemes

Industry schemes serve casual workers in high-mobility sectors like construction and catering. They let employees keep the same MPF account across employers and require contributions from the first day. This helps workers build retirement savings despite frequent job changes.

What investment options are available for MPF schemes?

Employees can choose from a range of investment funds based on their risk appetite and retirement goals:

Who is eligible to join MPF in Hong Kong?

Employees must join an MPF scheme if they meet all of the following conditions.

Full-time and part-time employees

• Aged 18 to 64
• Employed in Hong Kong under a written or oral contract
• Employed for 60 calendar days or more with the same employer

If a part-time employee’s contract ends before 60 days but they’re re-employed by the same employer, the 60-day period is counted cumulatively.

Casual employees

• Aged 18 to 64
• Employed under a written or oral contract
• Working in the construction or catering industry
• Employed on a daily basis or for a period less than 60 days

Contributions start from day one for casual employees and their employers.

Self-employed individuals

Freelancers, independent contractors, and other self-employed workers must enroll in an MPF scheme within 60 days of starting self-employment and make contributions.

Who is exempt from Hong Kong’s MPF?

Most employees working in Hong Kong must join an MPF scheme. However, the following categories are legally exempt:

Domestic workers

This includes individuals who provide services in an employer’s residence, such as security guards, gardeners, and babysitters.

Expatriate employees

Expats in Hong Kong with a Section 11 employment visa are exempt if:

• Their stay in Hong Kong is 13 months or less
• They participate in a recognized retirement or provident fund outside Hong Kong

If these conditions no longer apply, you must enroll them in an MPF scheme within 60 days after the exemption ends.

Other exemptions

Employees covered by:

• Statutory pension or provident schemes
• ORSO scheme with a valid MPF exemption certificate

How to enroll in MPF

Employers are required to enroll employees within 60 calendar days of their first workday. If the deadline falls on a weekend or holiday, it extends to the next working day.

Casual employees must be enrolled on or before their first day in a master trust or industry scheme.

To enroll your workers, follow these steps:

1. Provide the enrollment form

Give the employee an MPF enrollment form. It collects their fund selection, personal details, tax residency declaration, and signature. Provide it early to give them enough time to research their fund options.

2. Submit the form to the trustee

Submit the completed form to the MPF trustee. If the employee doesn’t fill it in properly, you must still submit it by the deadline to meet your legal obligation. However, submitting an incomplete or incorrect form may:

• Expose you to compliance risks
• Delay processing or result in a rejected enrollment
• Lead to errors in managing the employee’s MPF account

If the employee does not select a preferred investment fund, their contributions will be allocated under the Default Investment Strategy (DIS), which may not align with their personal financial goals.

To ensure form accuracy before submission:

• Provide guidance, including sample-filled forms to assist the employee
• Review completed forms immediately for missing data
• Follow up with the employee promptly to clarify unclear or missing fields

3. Provide a notice of participation

Once enrolled, the trustee sends the employee a notice of participation. It details the scheme name, trustee information, employee name, and issue date.

4. Start contributions

Begin MPF contributions from day 61 for regular employees and day 1 for casual employees.

Notify the trustee in writing within 30 days of any changes to your company’s name, address, email, or phone/fax number.

How to calculate MPF contributions

MPF contributions are based on an employee’s relevant income, including wages, bonuses, commissions, allowances, and other cash payments.

Both employer and employee contribute 5% of the relevant income, subject to minimum and maximum income levels.

The 5% rate applies regardless of whether the employee is paid monthly, weekly, or daily. However, income thresholds and caps are prorated based on the payment frequency.

The following contribution scales for monthly, weekly, and daily-paid employees are based on the Mandatory Provident Fund Schemes Authority (MPFA) official guidelines.

Minimum MPF Contributions for employees with a monthly wage

Minimum MPF Contributions for employees with a weekly wage

Minimum MPF Contributions for employees with a daily wage

Use the daily salary ranges listed below for each working day. Multiply by the number of relevant working days to determine total contributions.

If you enroll casual employees under a master trust scheme, use the same scales as regular employees. If enrolled in an industry-specific scheme, apply the following daily contribution scale.

Minimum MPF Contributions for casual employees under the industry scheme

You don’t need to track these thresholds manually if you partner with a global payroll provider. Deel helps you calculate contributions, stay updated on the latest regulations, and standardize reporting.

When are MPF contributions due?

MPF contributions are due by the 10th day of the month following payroll. If the 10th falls on a weekend or public holiday, the deadline shifts to the next working day.

You must accompany each payment with a completed remittance statement.

You can make payments through:

• Check (if mailed, ensure the trustee receives the check on or before the contribution deadline)
• Autopay
• Direct credit from your bank account
• Online payment (check with your trustee for available options)

Termination procedures for MPF in Hong Kong

Terminating employment can be a stressful process for both the employer and the employee. During offboarding, it's essential to follow MPF requirements carefully. Staying compliant helps you avoid penalties and ensures the employee’s MPF account remains in good standing.

Here are the steps to take when offboarding an employee in Hong Kong and how to handle MPF contributions.

1. Make the final contribution

Submit the employee’s last MPF payment by the 10th day of the month after their final work month.

2. Notify the trustee of cessation of employment

Notify the trustee in writing or through the remittance statement that the employee has left. Make sure the trustee receives this notification by the 10th day of the following month.

Late notification can result in a fine of up to HKD 20,000.

3. Maintain employee records

Keep detailed records of the employee’s income and MPF contributions for at least six months after termination.

Additionally, keep all information from your remittance statements for at least seven years, regardless of the employees’ employment status. This legal requirement under the MPF scheme ensures compliance and also helps you stay prepared for audits by the MPFA or your trustee.

Moreover, if a former employee raises a dispute, these records can protect you by clearly showing what was submitted and when.

What happens to employees’ MPF accounts after leaving your company?

After termination, the employee’s MPF account stays active and their accrued benefits remain invested unless they take one of the following actions:

• They start a new job, and their new employer contributes to a new MPF scheme
• They apply for early withdrawal and meet eligibility requirements, such as permanent departure from Hong Kong, early retirement at 60, or total incapacity

Fines and penalties of non-compliance with MPF in Hong Kong

The MPFA enforces compliance through investigations and inspections. Penalties for violations include:

• Surcharges
• Civil action to recover unpaid contributions
• Fines
• Prosecution

For example, the MPFA imposes the following penalties for common violations:

• Failing to enroll an eligible employee within 60 days can result in up to HKD 350,000 fine and 3 years’ imprisonment
• Collecting contributions but not remitting to the MPFA may lead to a fine of HKD 450,000 and up to 4 years’ imprisonment
• Late or incomplete contributions incur a 5% surcharge on the outstanding amount
• Providing false or misleading information can attract up to HKD 100,000 fine and 1 year imprisonment for the first offense

How Hong Kong’s MPF contributions affect company taxes

Employer-funded contributions are tax-deductible, including mandatory and voluntary payments. The deduction is capped at 15% of each employee’s total annual wages which includes their salary, bonuses, and allowances.

For example, with an annual salary of HKD 360,000, the maximum deductible contribution is HKD 54,000, even if actual contributions are higher.

Claiming these deductions can reduce your company’s profits tax liability, lowering your overall tax burden. This improves cash flow and frees up resources for other business priorities, such as hiring or expansion.

If your company makes a lump-sum contribution to an MPF scheme, it cannot deduct the full amount in a single year. Instead, under Section 16A of the Inland Revenue Ordinance, the contribution must be spread evenly over five years.

Simplify Hong Kong MPF compliance with Deel

Keeping up with MPF compliance in Hong Kong can be challenging, complex, and time consuming. You must ensure timely contributions, accurate reporting, and proper recordkeeping while staying updated on changing MPF rules and payroll regulations.

Missing any step can lead to costly penalties, disrupt your operations, and negative effects on employee retention.

Deel Global Payroll simplifies MPF and global payroll with an AI-powered platform backed by local experts. With Deel, you can:

• Automate MPF contributions along with other deductions and benefits
• Submit payments and remittance statements on time through our in-house team
• Centralize all MPF and payroll records in a secure platform
• Consolidate payroll across all countries you operate in
• Generate comprehensive global payroll reports and analytics
• Use a built-in HRIS to manage your international team

Stay compliant with Deel through automated global payroll compliance and real-time regulatory monitoring. Book a demo to see how we simplify MPF compliance.