To plan for retirement in Hong Kong can overwhelm you. Hong Kong has one of the highest costs of living worldwide and its average life expectancy ranks among the longest . This makes it crucial to build a financial safety net. For workers and businesses, two retirement plans lead the discussion: the MPF (Mandatory Provident Fund) and ORSO (Occupational Retirement Schemes Ordinance).
But how do you figure out which one fits your situation best? Should you go with the government-controlled MPF, or check out the more adaptable, company-run ORSO? This guide explains the basics — so you can make a smart decision for your future.
What is ORSO?
The Occupational Retirement Schemes Ordinance (ORSO) came into effect in 1993 well before MPF became a must. ORSO is a retirement plan that companies sponsor created to offer more flexibility and custom-made perks for specific employees in big businesses and global companies.
In contrast to MPF, ORSO isn’t mandatory — it hinges on an employer’s decision to establish such a plan. Some ORSO schemes even have an exemption from MPF, which means workers don’t have to contribute to both systems.
Key Features of ORSO Schemes
- Benefits You Can Customize: Companies can shape the plan to match their workplace culture, field, and employee makeup.
- Optional Sign-Up: Workers can decide to join or not, based on the plan’s rules.
- Guaranteed Payout or Investment Growth: ORSO plans can promise a set amount (defined benefit) or let contributions grow with investments (defined contribution).
- Way to Keep Top Talent: ORSO often helps attract and keep high-level executives and foreign workers by offering perks beyond MPF.
Who Can Join ORSO?
The company decides who’s eligible, unlike MPF which follows a universal law. Some businesses limit ORSO membership to:
- Higher-ups or long-term workers
- Foreign nationals employed in Hong Kong
- Workers in niche fields
MPF Exemption
When an employee joins an MPF-exempt ORSO plan, they don’t have to take part in MPF. This benefits high-income earners in particular, as MPF contributions have a limit (HK$1,500 from both employer and employee). ORSO, on the other hand often gives higher contributions and more flexible options to withdraw.
Pros and Cons of ORSO
Pros
- Tailored structure and chance for better benefits
- Assists companies to draw in and keep top workers
- Might let employees bypass MPF’s contribution caps
Cons
- Harder to manage, with steeper compliance expenses
- Not a good fit for all company sizes small and medium enterprises
- Benefits differ by employer so they lack standardization
What is MPF?
The Mandatory Provident Fund (MPF), which started in 2000 serves as Hong Kong’s required retirement plan. It applies to almost all workers and self-employed individuals aged 18–64, except those exempt (like people covered by MPF-exempted ORSO schemes).
It’s a defined contribution plan where the employer and employee both pay into a personal account.
How Does MPF Work?
- Contribution Rates: Employers and employees each contribute 5% of the employee’s income to the fund. This has a limit of HK$1,500 per person monthly (HK$3,000 in total).
- Participation: Every employee and self-employed individual aged 18 to 64 must take part.
- Investment Choices: Workers can pick funds (stocks mixed assets conservative options, etc.) or opt for the Default Investment Strategy (DIS).
- Withdrawal: People can access their funds when they turn 65, or sooner in certain situations like leaving Hong Kong for good.
Advantages and Disadvantages of MPF
Advantages
- Required by law and the same for all industries
- Protected by law, with strong government oversight
- Offers a dependable cushion for retirement funds
Cons
- Limits on contributions cap the benefits for those earning more
- Not many choices for where to invest
- Taking money out is tough
ORSO vs MPF: Main Differences
| Feature | ORSO | MPF |
| Introduced | 1993 | 2000 |
| Mandatory? | No | Yes |
| Who Contributes? | Employer-driven (voluntary for employees) | Employer + Employee (5% each, capped) |
| Flexibility | Highly customizable | Standardized |
| Target Group | Senior staff, expatriates, MNC employees | All employees aged 18–64 |
| Exemption | Can be exempt from MPF | Mandatory unless exempt via ORSO |
| Withdrawal | Employer-defined terms | Retirement age (65) or special cases |
Why Choose ORSO Over MPF (and Vice Versa)?
Companies choose ORSO or MPF based on their size, workforce makeup, and ability to manage the plan.
- To serve Large Corporations & MNCs: ORSO makes sense because it has an influence on customized benefits global mobility considerations, and executive retention.
- To serve SMEs: MPF is more practical. It’s straightforward, compliant, and needs little administrative work.
Example 1 – ORSO in Action
A global financial services firm in Central provides ORSO to its expatriate executives. Contributions go beyond MPF limits giving employees better retirement savings while the employer gains an edge in hiring.
Example 2 – MPF in Action
A local SME with 40 employees depends on MPF to meet legal requirements. While less flexible than ORSO, MPF ensures compliance without creating extra work.
How Payroll Software Makes MPF & ORSO Management Easier
When you run MPF for all your employees or juggle both MPF and ORSO, staying compliant can get tricky. From getting contribution calculations right to handling exemptions , mistakes can result in fines.
This is where Info-Tech’s HRMS and payroll software steps in:
- Automatically calculates contributions for MPF and ORSO
- Keeps you in line with Hong Kong rules
- Creates reports for audits and employee questions
- Grows with your company, from small businesses to big corporations
Check out Info-Tech Payroll Solutions to learn how you can cut down on time, make fewer mistakes, and help employees feel sure about their retirement plans.
Key Takeaways:
MPF is required for most workers giving a basic retirement safety net.
ORSO is company-driven, adaptable, and often better for high-paid staff and foreign workers.
Picking ORSO or MPF depends on company size, worker makeup, and key goals.
Payroll programs help simplify payments and rule-following letting HR teams zero in on people instead of paperwork.
Frequently Asked Questions:
Can a company offer both ORSO and MPF?
Yes. Some companies run both plans, but if an ORSO plan is MPF-free eligible workers can pick between the two.
Is MPF mandatory for everyone in Hong Kong?
Yes, MPF applies to all employees and self-employed individuals between 18 and 64 years old, with some exceptions like approved ORSO members.
What happens if an employer doesn’t follow MPF rules?
Breaking MPF regulations can result in fines extra charges, or even legal action. The MPFA (Mandatory Provident Fund Schemes Authority) keeps a close eye on compliance.
How do ORSO and MPF affect employee retention?
ORSO offers tailored benefits that appeal to valuable employees, while MPF provides a standard basic benefit. Together, they boost workers’ trust in their long-term financial well-being.
Which is better: ORSO or MPF?
Neither plan stands out as superior — MPF plays a crucial role in ensuring compliance and wide-ranging coverage, while ORSO proves ideal for companies aiming to boost their flexibility and competitive edge.
