Knowing more about MPF schemes and their types is important in Hong Kong. As Hong Kong has been crowned Asia’s premier financial hub and business destination. When starting a new organisation in Hong Kong, you need to be aware of different regulations and schemes. And know more about the Mandatory Provident Fund (MPF) before kickstarting the hiring process.
What is MPF in Hong Kong?
MPF is the short form for the Mandatory Provident Fund. MPF is compulsory and covers all employees and self-employed persons aged 18-64 in Hong Kong. It is a safety net for your retirement period.
The Hong Kong government initiated the Mandatory Provident Fund Schemes Ordinance (MPFSO) in 1995 due to the rapidly ageing workforce. The MPFSCO works as a framework for implementing employment-related MPF schemes for workers in the labour force to receive retirement financial savings.
The Mandatory Provident Fund Authority (MPFA) initially established the mandatory provident fund system in 1998 and officially launched its operation in 2000. By 2015, the MPF protected 85% of employees in Hong Kong, a significant increase from 33% in 2000.
This blog will give an overview of the types of MPF schemes and the procedures for enrolling employees in MPF in Hong Kong.
Uncover the different types of MPF schemes formed in Hong Kong and learn how each company enrols its employees.
Types of MPF Schemes
There are three main types of MPF schemes.
- Master Trust Scheme
- Employer-Sponsored Schemes
- Industry Schemes
Master Trust Schemes
Common type of MPF scheme operates by pooling contributions from participating employers, employees, and self-employed persons to achieve a scale of investments. It is open to all workers whose employers are participating under the Master Trust Scheme. Additionally, it is open to self-employed persons and persons with accrued benefits like sick pay and personal time off to be transferred from other schemes. Employers and employees contribute from small business enterprises, so this suits SMEs.
Employer-Sponsored Scheme
The scheme is specialised for corporations limited by a single employer and its employees in affiliated companies. Due to membership restrictions, it is more cost-effective for large corporations.
Industry Schemes
An Industry Scheme is provided for companies with high labour mobility. Industries like catering (food and beverage), retail, and construction appoint casual employees for particular hours or days (hired for short-term engagements for fewer than 60 days or on an ad-hoc basis). Casual employees are not supposed to change from these schemes when they change jobs. Since they are already allotted by the old and new employers registered under the scheme.
Learn More: Tips to Be Noted Before and An Employer and Employee Contributing in MPF.
How Do I Enrol My Employees On the MPF Scheme?
Enrolling a full-time or part-time employee is to be mandatory by the employer within the first 60 calendar days of employment if not then legal obligation must undergo as an employer. For every organisation your employee’s 60-day rule of employment is determines as probation period.
Here are the various procedure that are straight-away to be followed in enrolling an employee:-
- Allow your employee to fill the details seen in the enrolment form of MPF scheme. Their investment portfolio (types of funds), personal particulars, and a self-certification, which includes tax residency (indicating whether the resident is outside Hong Kong), will indicate and require them to sign the form.
- Submit the completed form to your trustee to setup an MPF account.
- Even if your employee does not submit the form on time then also you need to submit the incomplete form to the trustee before the deadline of 60 days. It is to fulfil your obligation as an employer.
Final Thoughts
Knowing all about the MPF scheme and its types can let you get an informative insight about how to enrol all the employees in a company to the scheme and make you profitable at your retirement period. Payroll software helps you easily automate employee data, set up accruing benefits involved in MPF, and manage payroll processing.
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