, Hong Kong
Photo by Jimmy Chan via Pexels

MPF offsetting arrangement to end in May 2025

It will end the practice of using mandatory MPF contributions to offset SP and LSP.

The government has announced that the Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Ordinance 2022 will take effect on 1 May 2025.

The ordinance, passed by the Legislative Council in June 2022, will end the practice of using mandatory MPF contributions to offset severance payments (SP) and long service payments (LSP).

Employers will still be allowed to use voluntary MPF contributions and gratuities based on service length for this purpose.

The abolition will not apply retroactively. If an employee's employment began before the effective date of the Amendment Ordinance, employers can continue to use accrued benefits from both mandatory and voluntary MPF contributions (made before, on, or after the effective date) to offset SP/LSP for the period prior to 1 May 2025.

The amendment will also affect occupational retirement schemes under the Occupational Retirement Schemes Ordinance (Cap. 426), the two school provident funds under the Grant Schools Provident Fund Rules (Cap. 279C) and Subsidised Schools Provident Fund Rules (Cap. 279D), as well as overseas occupational retirement schemes that are exempt from the MPF System.

To support employers, the government will also launch a 25-year Subsidy Scheme for Abolition of MPF Offsetting Arrangement starting on 1 May 2025. The scheme will help cover the costs of SP/LSP after the offsetting arrangement ends.

The commencement notice will be tabled for negative vetting at the Legislative Council on 4 December.
 

Join Hong Kong Business community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Exclusives

Hong Kong, China told to ban ‘zero-dollar’ tours
Retailers should improve customer service and create unique experiences to stay in the game.
Bonhams builds new headquarters in Hong Kong
It joins Sotheby’s, Phillips, and Christie’s, which have all upgraded their local spaces.