Retirement saving is one of the top benefits employees look for in this competitive market. Securing one which is legally established by the Hong Kong government might be the advantage for employers to stand out as a trustworthy working place. For that, Mandatory Provident Fund (MPF) contributions is the one you definitely need to know. Understanding the MPF practices and requirements ensures legal consents and helps build a positive relationship with employees by securing their financial future. Here, we will walk you through the best practices and requirements for managing MPF contributions.
What is MPF
The MPF Scheme has been launched to help Hong Kong’s workforce save for their future retirement. And, this mandatory saving scheme requires both employers and employees to make regular contributions to the employee’s MPF account. However, there are some exceptions for low earners and certain professions. As an employer, it is a must to understand the MPF system and to educate your employees about it to make sure everyone benefits accordingly.
Types of MPF
There are 3 types of MPF according to MPFA.
1.Master Trust Schemes
Master Trust Schemes are available to all employers, employees, self-employed persons and persons planning to open personal accounts or tax deductible voluntary contribution (TVC) accounts.
2.Employer Sponsored Scheme
Employer Sponsored Schemes are only available to employees of a single employer and its subsidiaries or associated companies.
3. Industry Schemes
Industry Schemes are specially designed for casual employees who are working on a day-to-day basis or for a fixed period of less than 60 days in catering industry and the construction industry.
MPF Requirements for Employers and Employees
- Employer Registration: Every employer must register their employees into an MPF scheme within 60 days of hiring.
- Employee Enrollment: Except for exempt persons, all full-time and part-time employees aged 18 to 64 who have already worked for a continuous period of 60 days or more must be enrolled in an MPF scheme.
- Monthly Contributions: Employers and employees are each required to contribute 5% of the employee’s relevant income per month.
- Timely Payments: Employers and employees must do the contributions on or before the 10th day of each month following the salary payment month.
Best Practices for MPF Management
- Educate Your Employees: Ensure your employees understand the MPF scheme, its benefits, and how their contributions are being invested. Regularly update them if there are changes.
- Accurate Contributions: Utilize payroll software that can automate MPF calculations and payments to avoid errors and delays.
- Regular Audits: Conduct periodic audits of your MPF contributions and records to ensure accuracy and compliance.
- Choose the Right Fund: Select a fund that offers good fund performance and low administration fees to maximize your employees’ retirement benefits.
- Stay Informed: Keep abreast of any changes in MPF regulations and update your practices accordingly to ensure ongoing compliance.
Benefits of Compliance
- Legal Compliance: Adhering to MPF requirements protects your business from legal penalties and ensures smooth operations.
- Employee Satisfaction: Proper MPF management enhances employee satisfaction and retention by demonstrating your commitment to their financial well-being.
- Reputation Management: Compliant MPF practices bolster your reputation as a responsible and ethical employer.
Let us help you;
Through MPF contributions, employees can also focus on their work without the need to worry about what will happen after retirement and employers can also create a smart and positive working space. However, employers must make monthly contribution to MPF schemes for their employees by law, making the payroll work even more tiresome. At FastLane, we provide one stop payroll services which of course include MPF. Contact us today and streamline all your payroll tasks effortlessly.