Introduction

For any business operating in Hong Kong, managing the Mandatory Provident Fund (MPF) is a foundational payroll requirement for individuals working in Hong Kong. MPF is a mandatory retirement protection scheme; the MPF system requires employers and employees to contribute monthly.

While the MPF rules — a 5% employer contribution matched by a 5% employee deduction—sound simple, real-world execution is fraught with compliance traps. Miscalculating "relevant income" (which includes bonuses and commissions), mismanaging the 60-day enrolment window, or misinterpreting contribution holidays can trigger automatic surcharges, IRD audit scrutiny, and potential financial penalties. 

With the city-wide transition to the centralised eMPF Platform, compliance is strictly monitored. This comprehensive guide breaks down contribution thresholds for the mandatory MPF in Hong Kong, enrolment timelines, and common employer mistakes. Understanding the MPF requirements will ensure your business remains 100% compliant.

Hong Kong MPF - Who Must Join an MPF Scheme? 

The Mandatory Provident Fund Schemes Ordinance (Cap. 485) governs the Mandatory Provident Fund. The operation of all MPF schemes is managed by the Mandatory Provident Fund Schemes Authority in Hong Kong. Hong Kong government introduced the MPF program in July 1995; the system went live in December 2000.

• Standard Coverage: According to the Hong Kong MPF Ordinance, all full-time and part-time employees aged 18 to 64 who have been employed for sixty continuous calendar days or more must be enrolled under an MPF program.
• Casual & Industry Schemes: The enrolment of an employee in an MPF scheme for casual or industry-specific employment is different, as workers in construction and catering must be enrolled regardless of employment length. For these cases, the enrolment is under specialised daily calculation.
• Exempt Persons:
• According to the Immigration Ordinance in Hong Kong under section 11, foreign employees holding employment visas who are either covered by a retirement scheme outside Hong Kong or granted permission to remain in Hong Kong for 13 months or less.
• Domestic helpers.
• Employees enrolled in recognised ORSO (Occupational Retirement Schemes Ordinance) schemes in Hong Kong.

Contribution Rules & Income Thresholds

According to the MPF compliance in Hong Kong, not all employees will contribute the same amount to the MPF in Hong Kong. Contributions are calculated based on MPF Relevant Income. The employer must also contribute to the scheme; the amount will also depend on the income:

What does " Relevant Income " mean:

• Relevant income to the MPF in Hong Kong includes base wages, sales commissions, discretionary bonuses, overtime pay, cash allowances, and end-of-contract gratuities.

• Does not include non-monetary benefits, expense reimbursements, severance payments, and long service payments. For example, if the employee paid travel expenses and these are reimbursed to him or her, this amount is not considered income. 

Type of MPF Schemes

There are three main types of MPF Schemes. You must identify them before choosing the appropriate MPF scheme:

1. Master Trust Schemes

The Master Trust Scheme is the most common and most well-known scheme. This scheme works under economies of scale, as they pool the contributions of multiple companies and multiple employees under the same MPF administration and investment. For an employee, once the trust scheme is selected, contributions to an MPF scheme are made through the company, which will retain both the employees' and the company's contributions and send them to the relevant MPF scheme.

2. Employer Sponsored Schemes

This scheme is set up by a company, and only employees of the company or branches of this entity can access this MPF Fund.

3. Industry Scheme

Industry schemes are specifically designed for temporary employees in the catering industry and the construction industry across Hong Kong. Temporary or casual employees are those hired on a day-to-day basis or under a contract of less than 60 days. This scheme is also available for regular employees of the catering and construction industry.

Manage MPF - The Enrolment & Payroll Timeline

To provide an easy guide, we, the experts at Element 8 Consulting, mapped out the key milestones you must follow as an employer from day one of the commencement of a new employee in Hong Kong: 

1. MPF Contribution Track: Day 1 of Employment.

Employer mandatory contribution obligation in Hong Kong begins accruing from day one of employment. You must properly record the commencement day of employment, either by stating this on the employment contract or offer letter. Once the employee starts to work, you can also use other methods to record the start of employment, such as electronic check-in and check-out, etc.

2. Complete Employee Enrolment: Within 60 Calendar Days.

In Hong Kong, the employer has the responsibility to formally enrol the employee into an MPF scheme via the eMPF platform or selected trustee. There is a wide option of trustees to work with; you can find the latest updated list of approved trustees on the MPF official website.

3. Apply Employee Contribution Rules: 30-Day Contribution Holiday.

It is important to know that employees are exempt from contributions for their first 30 days of employment plus the first incomplete payroll period. Deductions begin on the first complete wage period. Let us clarify this with an example:

The 30-Day Contribution Holiday Period

• Start Date: July 20 (Day 1 of employment)
• 30th Day of Employment: August 18
• Contribution Holiday Window: July 20 to August 18

The Incomplete Wage Period Waiver (Employee Side Only)

Because the 30th day of employment falls on August 18, the employee’s wage period for August (August 1 to August 31) is an incomplete wage period immediately following/overlapping the 30-day holiday.

• As a result, the employee does not make any MPF contributions for July or August.
• The employee’s mandatory contribution deductions for the first MPF payment begin on September 1 (their first full monthly wage cycle after the contribution holiday).

Employer Obligations (No Holiday)

The 30-day contribution holiday does not apply to the employer.

• The employer’s 5% contribution obligation begins accruing on Day 1 (July 20).
• From July 20 to August 31, the employer pays their 5% contribution, while $0 is deducted from the employee.

Detailed Summary Table

4. Remit Payments & Issue Pay Records: 10th of Each Month.

Once the corresponding period has passed, MPF contributions due on or before the 10th of the following month. Your trustee will provide you with the payment details, and you can transfer the money using your online banking or set up an automatic monthly deduction from your business account. Also consider that you must issue a monthly pay record to your employee within seven working days.

4 Common MPF Compliance Traps

In our professional experience, we encounter different problems when setting up an MPF account. These points aim to help you avoid those major compliance traps and surcharges:

1.  Excluding Bonuses and Commissions from Relevant Income: Calculating MPF solely on base salary is illegal; variable performance pays and cash allowances must be factored in.
2. Mistaking Part-Time Staff as Exempt: Part-time workers who meet the 60-day rule are legally entitled to MPF enrolment.
3. Misapplying the Contribution Holiday: Deducting employee contributions during their first 30 days leads to payroll over-deductions and compliance complaints.
4. Late Payment Surcharges: Missing the monthly 10th payment cutoff triggers an automatic 5% surcharge on unpaid contributions levied by the MPFA.

The eMPF Platform Era & Record Retention

With the purpose of modernising and optimising the MPF, in June 2024 the eMPF Platform commenced operation. This platform provides great benefits for Hong Kong employers: 

• Centralised eMPF Platform: All MPF trustee administration is consolidated into a single portal, streamlining enrolment, monthly remittance statements, and pro-rata joiner/leaver calculations.
• 7-Year Statutory Record Keeping: Employers are required by law to retain complete payroll, relevant income calculation sheets, and remittance records for at least 7 years.
• Tax Deductibility: Mandatory employer contributions are fully deductible against corporate Profits Tax (up to a limit of 15% of total employee emoluments).

Withdraw MPF

If you need to withdraw your mandatory MPF contributions, you can start the process through the eMPF Web Portal. MPF withdrawal can be under the following circumstances:

• Retirement at 65 years of age can withdraw your MPF by selecting the option "Attaining the Age of 65";
• Early withdrawal due to early retirement;
• Permanent departure from Hong Kong;
• Small balance of the retirement savings;
• Terminal illness or total incapacity.

Abolition of the MPF-LSP/SP Offsetting Arrangement

Under the Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Ordinance 2022, Hong Kong has officially declared the abolition of the MPF offsetting statutory Severance Payment (SP) and Long Service Payment (LSP).

Effective 1 May 2025 (the Transition Date), the new MPF offsetting arrangement ensures that mandatory retirement funds remain intact for employees, significantly updating employer payroll liabilities across the territory.

In certain cases, companies can find it complex to comply with the Severance Payment while avoiding using the mandatory MPF contributions to offset the severance. To help businesses—particularly SMEs—adapt to these increased labour costs, the Hong Kong SAR Government established a 25-year, HK$33.2 billion subsidy scheme. This initiative provides tiered financial support that caps an employer’s out-of-pocket exposure during the initial post-transition years, gradually tapering off over two decades to give companies ample time to adjust their long-term accounting reserves.

Eliminate Payroll Friction with Professional MPF Management

The MPF is Hong Kong's compulsory retirement savings programme. The scheme benefits part of Hong Kong's population. The top MPF benefit is that it provides safe planning for the future of Hong Kong residents. 

Managing MPF contributions, pro-rata calculations, and eMPF submissions manually increases the risk of calculation errors and late-remittance penalties.

Streamline your payroll with Element 8 Consulting.

From precise MPF calculations and eMPF platform setup to annual HR tax filing (BIR56A/IR56B), our team ensures your business remains fully compliant with Hong Kong labour and tax regulations.

Contact Element 8 Consulting today for an HR & Payroll compliance review at info@element8.hk

Frequently Asked Questions 

Who is required to enrol in the Hong Kong MPF scheme, and what are the mandatory contribution rates?

Except for exempted individuals, all regular and casual employees aged 18 to 64 who have been employed for 60 days or more must enrol in an MPF scheme. Both employer and employee must contribute 5% of the employee's relevant monthly income, subject to the current minimum income threshold (HK$7,100/month) and maximum income cap (HK$30,000/month—capping the maximum mandatory contribution at HK$1,500 per month each). The employer has the responsibility to formally enrol the employee into an MPF scheme within 60 days.

What should I do if I have Multiple MPF accounts?

It is common that after working several years you might have multiple MPF accounts. You can consolidate all the accounts through the MPF electronic platform. 

Do foreign employees or business owners need to pay MPF?

Company directors receiving a director's fee or salary as employees must participate. However, foreign expats entering Hong Kong on employment visas for thirteen months or less, or those covered by an overseas home-country retirement scheme, are exempt from MPF enrolment. 

Can my employer use my MPF contributions to offset my Severance Payment (SP) or Long Service Payment (LSP)?

From the 1st of May 2025, employers cannot use MPF contributions to offset statutory severance payments or long service payments. However, gratuities and accrued benefits of the voluntary contributions made by the employer can still be used for MPF offsetting.

Can MPF funds be withdrawn early before retirement at age 65?

Yes, under strict statutory circumstances. Scheme members can withdraw their MPF early for: early retirement at age 60; permanent departure from Hong Kong; total incapacity or terminal illness; death; or a small balance account of HK$5,000 or less with no contributions for 12 months.