MPF Scheme Types
What this domain tests
Scheme architecture: master trust, employer-sponsored and industry schemes, umbrella structures and constituent funds, the Default Investment Strategy, and the MPF-exempt ORSO alternative.
The main scheme types
- Master trust scheme: open to any employer, member or SEP; many employers pool into the same trust, giving economies of scale. Most Hong Kong employees are in these.
- Employer-sponsored scheme: set up by one employer, or a group, for its own staff; may be semi-segregated, with the assets of participating employers ring-fenced.
- Industry scheme: for casual employees (daily-paid, engaged for a short period) and SEPs in the construction and catering industries. Employers of casual employees in these industries must use an industry scheme. Contributions are based on daily wages, and the employer must contribute even where a day's wage is low.
Structures inside a scheme
A scheme may be a single fund or an umbrella fund with several constituent funds, among which members direct contributions. Schemes may invest through approved pooled investment funds (APIFs). Every MPF scheme must offer the Default Investment Strategy, made up of the Core Accumulation Fund and the Age 65 Plus Fund, with capped fees; it applies automatically where a member gives no instruction or an invalid one.
ORSO compared
An ORSO scheme may apply for an MPF exemption certificate if its benefits are no less favourable than MPF. Members of an exempt ORSO scheme need not also join an MPF scheme for the same employment, and an employer cannot run both for the same employee.
Worked example
A catering firm hires a dishwasher paid HK$700 per day, three days a week. This is a casual employee in the catering industry, so the employer must enrol him in an industry scheme, not a master trust scheme, and contributions are computed on daily wages: 5% from the employer on each day's wage, and 5% from the employee on days where the wage reaches the daily threshold.
Traps that cost marks
- Assuming industry schemes are open to any low-paid or temporary worker; they are confined to construction and catering casual employees and SEPs.
- Believing the DIS is optional for the scheme (schemes must offer it) or compulsory for the member (members may opt out).
- Treating a semi-segregated employer-sponsored scheme as fully pooled with other employers' assets.
- Forgetting that exempt ORSO membership satisfies the employer's MPF obligation.