Mandatory Provident Fund or MPF as the name suggests is a mandatory or compulsory saving plan for all the working population of Honk Kong. It was enacted in 1995, and has been into operation since December 2000. The purpose of this scheme was to avert the old age crisis and to ensure a scheme which is beneficial to the residents when they retire. According to Mandatory Provident fund every working person in Honk Kong has to contribute mandatory 5 percent of his monthly salary towards the scheme and the same amount is also contributed by the employer for the employee’s benefit.
The funds that are contributed in respect of the members account can be invested in various MPF schemes for investment. These are controlled investment schemes, which have a very limited risk. So the money that is being contributed is almost risk free which is expected to grow over a period of time.
However, whatever money you are contributing to such schemes and any benefits accruing from such investments cannot be withdrawn till you reach the age of 65 or if you have stopped working after the age of 60. There are a certain exemptions to this rule though. You can get the benefits before this period also if you are exiting Honk Kong and do not intend to come back. Or incase of death or incapacity and so on.
All those people who are earning a salary between $78000 per annum and $3000000 per annum are liable to make contribution of 5 percent every month towards the scheme. Anyone earning less than the minimum level or more than the maximum level is not liable to make any contributions. However, if anyone is earning less than $78000 per annum they are not liable to pay 5 per cent but there employers still have to make a contribution in respect to the employee’s MPF scheme.
All the contributions that one makes in regard to MPF scheme is tax deductible up to $14500 per annum. Also under certain special cases you may be exempt from contributing towards your MPF scheme. This may include if you are employed in Honk Kong for a period of less than 13 months and are not living in Hong Kong. If you are civil servant or a judiciary officer or members of ORSO schemes, you are not liable to make any contribution.
You are also free to choose your scheme trustee for managing the contribution made for your MPF scheme. But you can only choose a trustee that is approved by MPFSO. Your trustee is supposed to give you a detailed summary of all your benefits your accounts within 3 months from the ending of the financial year in which the contributions are made. You can also transfer your accruals from previous account to your new account in case you are changing jobs. If you have to check the balance online, most MPF scheme companies give you online services where you can login and check your balances and accruals online.