MPF System Overview
What this domain tests
The MPF system is Hong Kong's second-pillar, privately managed retirement savings arrangement. The Mandatory Provident Fund Schemes Ordinance (Cap. 485) was enacted in 1995 and the system went live on 1 December 2000; the Mandatory Provident Fund Schemes Authority (MPFA), a statutory body set up in 1998, is the regulator. Exam questions here test the three-pillar model, coverage rules, exemptions, and how MPF sits alongside ORSO and the eMPF Platform.
The three pillars
- Pillar 1: non-contributory, tax-funded safety net (CSSA and Social Security Allowance). Not MPF.
- Pillar 2: mandatory, privately managed, employment-based saving, comprising MPF schemes and MPF-exempt ORSO schemes.
- Pillar 3: voluntary saving, including voluntary contributions and Tax-deductible Voluntary Contributions (TVC).
Coverage
Employees aged 18 to under 65 and self-employed persons (SEPs) in the same age band must be covered. The employer must enrol a new employee within the first 60 days of employment, and contributions run from the first day of employment. Exempt groups include civil servants on pension terms, members of MPF-exempt ORSO schemes, domestic helpers, self-employed hawkers, persons covered by statutory provident funds such as the Subsidized Schools Provident Fund, non-Hong Kong residents holding an overseas retirement scheme who work in Hong Kong for 13 months or less, and anyone under 18 or aged 65 or over.
Worked example
A 30-year-old is hired on 1 March on HK$20,000 a month. Enrolment must be completed within 60 days, by 29 April, but that deadline is not the payment deadline. The March contribution period ends on 31 March and both 5% contributions (HK$1,000 each) are due by the contribution day, the 10th day of the following month, i.e. 10 April. Late payment attracts a 5% surcharge.
Traps that cost marks
- Treating Pillar 1 social security as part of MPF.
- Assuming every worker is covered; domestic helpers and self-employed hawkers are not.
- Mixing the 60-day enrolment deadline with the monthly contribution deadline.
- Thinking ORSO sits outside Pillar 2: an MPF-exempt ORSO scheme is a Pillar 2 scheme.
- Forgetting that coverage starts on the first day of employment, not on the enrolment date.