6 things you need to know about the MPF in Hong Kong

January 6, 2022

Regardless of geographical location, retirement savings is usually one of the top benefits that employees look for. While employer matching can be a great perk, in certain countries it’s actually a requirement.

The Mandatory Provident Fund (MPF) is Hong Kong’s government-mandated approach to retirement savings. Depending on employee classification, global employers may be required to contribute to these funds. By familiarizing yourself with the specific requirements and scenarios, you can stay compliant—and avoid hefty penalties and fines.

1. What is a mandatory provident fund?

The mandatory provident fund, or MPF, in Hong Kong is a structured savings scheme designed to provide retirement savings for employed and self-employed Hong Kong citizens. In most cases, participation is mandatory for employers and employees. But there are some exceptions for low earners, certain professions, and non-citizens.

These schemes come in three types:

  • Master trust schemes (common)
  • Employer-sponsored schemes (best for larger companies)
  • Industry schemes (best for casual/mobile employees)

Multinational companies that employ citizens in Hong Kong between the ages of 18 and 64 years old are required to participate with compulsory enrollment due by the 60th day of employment for full- and part-time employees. Enrollment is due on the first day of employment for casual employees (those not guaranteed employment for a specific duration like seasonal bartenders.)

2. Understanding the types of MPF in Hong Kong

The size of your company and your industry will determine which type of MPF you will use. But even within each type, there are dozens of individual choices that can get a little tricky.

Master trust schemes

The most common type of MPF in Hong Kong is a master trust scheme. These are open to employees of participating companies, self-employed individuals, and former employees with accrued benefits. These MPF schemes pool contributions from different participants at different levels of risk. They’re the perfect option for most small and medium-sized businesses.

Common Investment Options for Master Trust & Employer-Sponsored Schemes

Investment Type

How it Works

Risk Level


Money Market Funds

Short-term; high-quality interest-bearing securities


Administrative fees charged as a percentage of asset value

MPF Conservative Fund

Special type of money market fund that invests exclusively in short or long-term HKD investments


Administrative fees are restricted to months that meet or exceed prescribed savings rates

Guaranteed Fund

Investments with a guaranteed rate of return suitable for risk-averse groups

Lower risk; varies depending on the conditions of the guarantee

Strict guarantee conditions like minimum investment period or withdrawal requirements

Bond Fund

Earns stable income from interest

Low to medium risk; known for stability

Fees assessed as a percentage of asset value

Mixed Asset Funds

Focuses on asset appreciation and higher rates of return

Medium to high risk; flexible to meet different stages of investing

Fees assessed as a percentage of asset value

Equity Fund

Uses stocks to achieve capital appreciation and high rates of return

Relatively high risk

Fees assessed as a percentage of asset value

Index Fund

Uses stocks to earn return rates similar to index funds

Medium to high risk

Tends to accrue lower fees than other stocks options due to less frequent trading

Employer-sponsored schemes

Larger corporations with the resources (including a large number of participants) have the option to create their own pension schemes instead of pooling with other companies. Master trust schemes generally have access to a larger selection of investment options while employer-sponsored schemes are limited to those selected by the employer.

Industry schemes

Employees who tend to change employers more frequently can miss out on retirement savings benefits. But since the MPF in Hong Kong is compulsory, they’ve designed a scheme to fit these casual employees. Caterers, construction workers, and people employed in other highly mobile occupations can register under an industry scheme that is not tied to a specific employer.

3. How to choose the right MPF funds

Unless your multinational company has a large number of Hong Kong-based employees or you tend to employ transient workers, you’ll probably be choosing between the particulars of a master trust scheme. 

That means that you’ll need to choose a portfolio of investment options that meet the needs of your workforce. Luckily, investment principles are the same across almost any economy. The same investment principles that work in the U.K. or the U.S., for example, can also be applied in Hong Kong. For example, a younger workforce can tolerate more risk, while those closer to retirement will need more security. 

When you decide on an investment portfolio, focus on risk level and administrative fees to create a default investment strategy; then, add some flexibility by choosing optional elections employees can use to tailor their investment strategies based on age, income and retirement goals.

4. What you need to know about enrollment and cessation

All eligible employees between the ages of 18 and 64 should be enrolled within the first 60 days of employment. This is non-negotiable and missing the deadline will lead to massive consequences. 

Keep in mind:

  • There are no exceptions for conflicting company policies. If your company enforces a 90-day probation period, you will still be required to enroll probationary employees in an MPF in Hong Kong by the 60-day deadline.
  • Some employees may not cooperate. Your company can still comply by submitting your portions of the appropriate paperwork before the deadline. 
  • Employers are required to make regular, monthly contributions by the 10th day of every month for regular salaried employees. With the exception of casual employees, employers and employees are obligated to contribute at least 5% of their minimum relevant income (HKD 7,100 per month). For employees earning more or less than the minimum relevant income, contributions are adjusted as follows:

Minimum MPF Contributions for Employers & Employees

Salary Range

Employer Contribution

Employee Contribution

Less than 7,100 HKD

5% of Salary

Not Required

7,100 - 30,000 HKD

5% of Salary

5% of Salary

More than 30,000 HKD

1,500 HKD Max

1,500 HKD Max

  • Employers are required to provide proof of contributions (e.g. pay stubs) within 7 working days of any contribution disbursement. Employers should also maintain records of contributions for each employee for up to 7 years.

Who is exempt?

Of course, there’s an exception to every rule. 

Certain employees may be exempt from participation in a provident mutual fund scheme. For example, anyone who reaches the age of 64 years old by December 1st is considered near retirement and is no longer required to participate. 

Certain types of employees that may have retirement plans provided through other means, like grant-funded school teachers, may be exempt. And foreign employees who enter Hong Kong for fewer than 13 months, or who are otherwise covered by an overseas retirement fund, are also exempt from participation.

What you need to enroll a new employee

Your company will set up a mutual provident fund scheme with a trustee, or designated party, that manages the scheme independent from your company. A complete enrollment, submitted by the 60th day of employment, includes:

  • Selection of appropriate investment options
  • Personnel details, including name, date of birth, Hong Kong ID numbers, etc.
  • A signed personal declaration of residency in Hong Kong

Terminating participation for cessation of employment

It’s a fairly simple two-step process to terminate participation in an MPF fund:

  • Calculate the employee’s final pay and contributions, and submit payments prior to the next monthly deadline with your regular payroll contributions.
  • Provide written notice by the next contribution period (10th day of the following month) to the trustee that identifies the terminated employee and last day of employment. 

5. Understanding your risks: fines and penalties

Unfortunately, you can’t just leave this one on the back burner—employer compliance is extremely important when it comes to the MPF. 

The Hong Kong government enforces MPF participation by using hefty fines—and even potential imprisonment—for individuals or companies who shirk their responsibilities.

For example, missing the 60-day enrollment deadline can cost your company up to $350,000 HKD in fines per offense. Non-compliance is thoroughly investigated in Hong Kong. If liable parties acting on behalf of a company are convicted, they face up to three years in jail.

Forgetting to notify trustees when employment is terminated can also rack up big fines. The first offense is typically 5,000 HKD with each additional offense at 20,000 HKD.

6. How MPF Hong Kong contributions affect taxes

Both employees and employers can claim MPF Hong Kong contributions on their annual taxes. 

Employers can claim up to 15% of an employee’s annual salary. For most employees, the employer-required contribution is 5% of their salary, capped at 1,500 HKD for higher earners. 

Employees can claim up to 18,000 HKD in contributions annually when filing their taxes. 

The bottom line on compliance for MPF in Hong Kong

While retirement savings is mandatory in Hong Kong, you don’t need to navigate it yourself. If your multinational company is expanding into Hong Kong, consider a global managed payroll company to help you set up compliant and efficient payroll processes.

Keep in mind, though, the MPF isn’t the only challenge you may face as you expand internationally. You won’t want to miss this ebook:

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