What is MPF and why do you need it?

One of the perks of being an employee or a self-employed person is the fixed income you receive daily, weekly, or monthly.

You can always plan your finances and easily take out loans and mortgages for capital-intensive projects based on your earnings. 

But what happens when you can no longer work to earn a living?

How do you ensure that you live comfortably after retirement? 

If you’re resident in Hong Kong, the MPF is the answer to these questions.

Keep reading to find out all you need to know about the MPF. 

What is MPF?

The MPF, or Monetary Provident Fund, is a mandatory retirement savings scheme introduced by the Hong Kong government on December 1, 2000.

The MPF is a privately managed fund for employees and self-employed persons in Hong Kong which enables them to accrue financial benefits for the future. 

With this scheme, you get to save some of your income while working.

You’ll become entitled to receive the accrued benefits upon retirement or other circumstances.

Who needs MPF in Hong Kong?

In Hong Kong, the MPF scheme is compulsory for employees and self-employed persons between ages 18-64 with a few exemptions. 

Persons exempted from remitting funds to the MPF are: 

  1. civil servants, judicial officers, teachers in grant schools, and other individuals covered by provident fund schemes or statutory pension;
  2.  members of occupational retirement schemes regulated under the Occupational Retirement Schemes Ordinance (“ORSO”); 
  3. expatriates employed in Hong Kong or self-employed in Honk Kong for not more than 13 months; 
  4. expatriates who are members of foreign retirement schemes; 
  5.  employees of the European Union Office of the European Commission in Hong Kong;
  6.  domestic workers;
  7. self-employed hawkers; and
  8. persons employed for less than 60 days, excluding casual employees.

Who contributes to the  MPF and what is the contribution rate?

All employers, employees, and self-employed persons not exempted from the scheme contribute funds to the MPF at a fixed rate.

The party to contribute and the rate depends on the minimum and maximum relevant income which is $7,100 monthly or $280 per day and $30,000 monthly or $1,000 per day respectively. 

 If you earn less than the minimum relevant income as an employee, you do not have to contribute to the MPF.

However, your employer will be required to remit 5% of your income to the MPF.

If you earn more than the maximum relevant income, you’ll also not be required to contribute to the fund but your employer needs to contribute $1500 to the fund on your behalf.

If you earn between $7,100 to $30,000 you’ll be liable to contribute 5% of your income which will be deducted from your income and remitted by your employer. 

If you’re self-employed, you must contribute 5% of your relevant income if your income exceeds the minimum relevant income and is less than the maximum relevant income.

If you earn more than the maximum relevant income, you’ll be required to contribute $1500. 

Apart from the mandatory contributions, you may elect to make additional contributions voluntarily. 

Can you withdraw your entitlement from the MPF before retirement?

While the MPF is a great initiative that encourages one to save and plan for the future, certain incidents may occur which makes it pertinent to withdraw one’s accrued benefits under the scheme.

Hence, you may be wondering what it takes to withdraw your accrued benefits. 

Generally, you’ll not be eligible to withdraw your funds until you reach the retirement age of 65.

However, you can withdraw the funds before retirement in any of the following instances: 

  1. If you retire  at age 60
  2. If you’re leaving Hong Kong permanently
  3. If you become totally  incapacitated or suffer from a terminal illness
  4. If you have a balance of $5,000 or less in the scheme

Why do you need it?

If you’re looking for a convenient way to save for the future, you need the MPF.

The MPF ensures that you enjoy the standard of living you were accustomed to while working when you stop working.

The MPF is also beneficial for the following reasons:

You get to enjoy reduced tax liability

The MPF reduces your tax burden as your mandatory contribution will be deducted when calculating your taxable income.

You’ll also not be liable to pay tax on the lump sum and monthly payments you receive as your entitlement. 

Your funds are invested in low-risk assets

Investing part of your salary may seem like a viable alternative to the MPF and it’s possible to get higher returns with such investments.

However, the MPF is ideal if you’re risk-averse or looking for a low-risk investment for your retirement savings.

The law requires each MPF scheme to maintain a capital preservation fund that will be invested in low-risk assets like bank deposits and money market instruments.

The MPF is safe

Retirement savings are meant to cater to your financial needs in the future. Thus, it’s important to ensure the safety of such retirement funds.

The MPF is a secure contribution fund. Several mechanisms have been put in place to ensure the protection of the funds.

For instance, the law requires that all MPF schemes are maintained by MPF trustees.

Qualified custodians which are often authorized financial institutions are also appointed as custodians. It’s highly regulated.

Therefore, it’s safer than most retirement savings options out there.

You earn extra income

The MPF ensures that you earn an additional 5% of your income or a maximum of $1500 depending on your income.

Your employer is mandated to contribute this sum without deducting it from your salary.

For self-employed persons, you’ll also be paying yourself more by contributing the extra sum to the scheme. 


There are several ways to ensure that you live comfortably in your old age or when you can no longer work.

The MPF is a convenient way for residents of Hong Kong seeking to do so.

It is backed by the government and enjoys maximum patronage from many employers in the region.

Also, it is mandatory and non-compliance attracts penalties.   

MPF for Employers

All employers need to provide MPF to every employee in the company.

That means signing up and arranging the payroll disbursements to include MPF in their salary.

Finding a provider and arranging your payroll can be a hassle for a business just getting started.

Open your company in Hong Kong with Air Corporate, and we’ll take care of your MPF needs.

Vivian Au photo
Vivian Au

For many years, I worked at big accounting and company secretary firms in Hong Kong. I started Air Corporate to make the life of entrepreneurs and SMEs easy.

Vivian Au

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