Salient Characteristics of the MPF System 強積金的特點

Mandatory Participation and Employment Basis 強制參與及以就業為基礎

Except for exempt persons, relevant employers, relevant employees and self-employed persons must join MPF schemes. Mandatory participation extends the coverage of retirement protection; joining a scheme is not simply a matter of personal preference.

Employers select MPF trustees, join one or more schemes and enrol their relevant employees in the chosen schemes. Employees then choose investments from the funds offered by those schemes. Choosing a scheme and choosing funds are decisions made at different levels.

Self-employed persons choose their own schemes. Unless exempt, they must join even when their income is below the minimum relevant income level. The duty to join a scheme and the duty to make mandatory contributions must be considered separately.

Contribution Rates and Relevant Income Limits 供款比例及有關入息上下限

Under the normal monthly contribution rules, the employee and employer each make mandatory contributions of 5% of the employee’s relevant income. If monthly relevant income is below HK$7,100, the employee need not contribute, but the employer must still contribute 5% of the employee’s actual relevant income. At exactly HK$7,100, the employee no longer qualifies for this low-income exemption.

The maximum monthly relevant income level is HK$30,000. Neither party must make mandatory contributions on income above that level. The monthly mandatory contribution limit is therefore HK$1,500 for each party, rather than HK$1,500 between them.

Self-employed persons also contribute 5% of relevant income. The minimum and maximum relevant income levels are HK$7,100 and HK$30,000 when calculated monthly, or HK$85,200 and HK$360,000 when calculated annually. No mandatory contribution is required below the applicable minimum; contributions become payable at the minimum but are capped at the applicable maximum.

Defined Contribution, Vesting and Full Funding 界定供款、權益歸屬及全數資金

MPF uses a defined contribution model: contributions are calculated by reference to the member’s relevant income, used to buy MPF fund units and accumulated with investment returns in the member’s own account. Accrued benefits at retirement depend on contributions and investment performance, rather than a fixed retirement amount promised in advance.

Mandatory contributions paid by or for a member vest fully and immediately in that member when paid into an MPF scheme. Investment returns generated from those contributions also vest fully and immediately. Employer contributions do not remain the employer’s property merely because the employer paid them.

Full funding means that accumulated assets support members’ future benefit withdrawals and that the system has sufficient assets to meet those payments. It does not promise a fixed retirement amount: investment performance still affects a member’s account value under the defined contribution model.

Private Management and Market Operation 私營機構管理及市場運作

MPF schemes are managed by private entities and operate through market mechanisms. Competition among those entities can improve efficiency for the benefit of scheme members.

Mandatory participation can coexist with private management. A statutory duty to participate does not mean that the Government directly operates MPF schemes. The MPFA regulates the system, while private entities manage the schemes.