How Hong Kong’s Mandatory Provident Fund Scheme Applies to Expats

Where is 5% of your paycheck going and why?

If you’re new to Hong Kong and have arrived in this intensely dynamic city to earn a living, the last thing on your mind is probably your retirement plan. But depending on your employment visa or contract validity period, you might see a percentage of your monthly paycheck being spirited off to contribute to your MPF (Mandatory Provident Fund).

What is it?

The MPF Scheme is a retirement protection scheme that was launched in December 2000 as a solution to the 1994 World Bank’s “Averting the Old-Age Crisis: Policies to Protect the Old and Promote Growth” report that advised a three-pillar approach to protect the ageing population. In 2005, the World Bank expanded the approach into a five-pillar framework that includes:

Pillar Zero: a non-contributory, publicly financed and managed system that provides a minimal level of protection for retirement;

Pillar One: a mandatory, contributory and publicly managed system;

Pillar Two: a mandatory, privately managed, fully funded contribution system;

Pillar Three: voluntary savings (e.g. personal savings and insurance); and

Pillar Four: informal support (e.g. family support), other formal social programmes (e.g. health care and housing), and other individual assets (e.g. home ownership).

The MPF system falls under Pillar Two. In a nutshell, employees are required to contribute a percentage of their monthly income into an MPF account, a contribution that is matched by their employer and deposited into the same account. In most cases, the value of the account can only be withdrawn when the individual reaches the retirement age of 65.

However, the MPF is more like a financial investment product rather than a simple savings plan. When you register for an MPF account with an investment provider, you can also choose which constituent funds you want your savings to go into. Depending on your risk appetite, you can choose to invest your retirement money into stabler funds or growth potential funds.  

When it comes to investment though, you should never put all of your eggs in one basket. In addition to the mandatory contribution to your MPF, you should still look into other ways to save for retirement. The World Bank’s five-pillar framework has some good thought starters on savings and investment opportunities. If you normally practice voluntary savings on a monthly basis, you’re already on your way to a better financial future. You might be familiar with personal finance management and budgeting app in U.S or in  Europe such as Monzo, and Spendee. In Hong Kong, now you can also find a personal finance app like gini , this “money made smarter” app can help you manage income and savings levels to give you a better picture of your money habits in the long run.

Short-term expats

But what if you’re not interested in retiring in Hong Kong at all? For people who plan on leaving Hong Kong permanently under a declaration that they will not return to the city to live or work in the future, they will be allowed to withdraw their MPF balance.

If plans change and you wind up in Hong Kong again for a new opportunity, while you will still be required to pay into the MPF scheme again, you will not be allowed to withdraw your balance a second time for the same reason of permanent departure. In that case, you must wait until you reach the age of 65 or for one of the following remaining reasons for early withdrawal:

  •     Early retirement at the age of 60 with declaration of no intention of becoming employed or self-employed again
  •     Total incapacity with medical certificate
  •     Terminal illness with medical certificate
  •     Small MPF balance of less than HK5,000 among all accounts and no contribution in 12 months with declaration of no intention of becoming employed or self-employed again
  •     Death

Do I have to participate?

While the MPF is a mandatory scheme in Hong Kong, some expats are exempt from the contribution if they are already covered by an overseas retirement scheme. Alternatively, people who are in Hong Kong under employment contracts or working visas that are valid for less than 13 months are also exempt from paying into MPF. But if your employment is extended for any reason beyond 13 months, both you and your employer are required to set up an account and start the monthly payment process into Hong Kong’s retirement scheme.

How much is my contribution?

(Source: MPF Authority)

Employees and employers pay according to the employee’s monthly income levels. Self-employed individuals also contribute at the same rates as above, according to their income levels, minus the matched contributions of an employer, but have the option of paying into their account on a monthly or yearly basis.

The employee’s contribution is usually deducted from their salary automatically so remember to take this into consideration if you’re signing a long term employment contract. For example, if your base salary is set at HK20,000, your employer will automatically deduct HK1,000 from your monthly paycheck and deposit it into your MPF account, leaving you with a net HK19,000.

Consult an MPF provider, your employer, or the Mandatory Provident Fund Schemes Authority at for more information about how you can best take advantage of the investment system for your ideal retirement lifestyle or, if you plan on leaving Hong Kong in the near future, how to best manage your contributions for maximum short-term returns.

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