Hong Kong MPF exemptions: who is exempt from mandatory contributions

Hong Kong MPF Exemptions

An employee earning HK$6,000 a month pays nothing into their MPF. Their employer still pays 5%. That is the simplest case, and it is where most confusion about Hong Kong MPF exemptions begins.

The Mandatory Provident Fund Schemes Authority (MPFA) administers the system under the Mandatory Provident Fund Schemes Ordinance (Cap. 485). Most employees in Hong Kong must participate. Several categories are exempt from making mandatory contributions, either fully or partially.

Hong Kong MPF Exempt Persons

A Hong Kong MPF exempt person is an individual with no obligation to make mandatory contributions to an MPF scheme. The MPFA defines specific categories. The most common exempt persons are:

• Employees whose monthly relevant income is below HK$7,100. These employees make no employee contribution. The employer must still contribute 5% of the employee’s relevant income.
• Employees who are members of an Occupational Retirement Schemes Ordinance (ORSO) scheme that holds an exemption certificate under Cap. 485. These employees are exempt from MPF enrolment for that employment.
• Overseas employees who have no Hong Kong employment. An employee working entirely outside Hong Kong with no Hong Kong employment contract is not subject to mandatory MPF contributions.
• Certain short-term employees employed for fewer than 60 days, unless they are under a continuous contract under the Employment Ordinance (Cap. 57).

Verify the exemption status of each employee before deciding not to enrol them. The MPFA publishes the full list of exempt persons in its guidelines.

Hong Kong Mandatory Provident Fund Exemptions

Hong Kong mandatory provident fund exemptions cover both employees and employers. The exemptions remove only the obligation to make mandatory contributions. They do not remove all MPF-related duties.

For employees earning below HK$7,100 per month, the exemption applies only to the employee contribution. The employer must still contribute 5% of the employee’s relevant income. Low-income workers receive employer contributions to their MPF account even when they contribute nothing themselves.

For employees earning above HK$30,000 per month, contributions are capped. The mandatory contribution is calculated only on the first HK$30,000 of relevant income. Employer and employee each contribute a maximum of HK$1,500 per month (5% of HK$30,000). Income above HK$30,000 is exempt from mandatory contributions. Voluntary contributions may be made.

Hong Kong MPF Contribution Exemption Rules

The Hong Kong MPF contribution exemption rules are set out in the Mandatory Provident Fund Schemes Ordinance (Cap. 485) and the MPFA’s guidelines. Key rules:

• Enrolment deadline: Enrol a new employee in an MPF scheme within 60 days of the employment starting. This applies even if the employee’s income is below HK$7,100, because the employer must still contribute.
• Exemption for ORSO members: If an employee is already a member of an ORSO scheme that holds an exemption certificate, the employer does not need to enrol them in an MPF scheme for that employment. The ORSO scheme must be registered under Cap. 485 and the employee must be a member of it.
• Exemption for overseas employees: An employee who works entirely outside Hong Kong and has no Hong Kong employment contract is exempt from MPF contributions. Confirm that the employment is genuinely overseas and not a Hong Kong employment.
• Exemption for short-term employees: Employees employed for fewer than 60 days are exempt from MPF contributions, unless they are under a continuous contract (the 4-18 rule under Cap. 57). An employee who works at least 18 hours per week for four consecutive weeks is under a continuous contract and must be enrolled.

The MPFA provides a detailed guide on contribution exemption rules at mpfa.org.hk.

Hong Kong MPF Exemption Categories

The Hong Kong MPF exemption categories group into four types:

Document the exemption category for each employee and retain records. The MPFA may request evidence of exemption during an inspection.

Exempt Employee and Exempt Employer

An exempt employee falls into one of the categories above. An exempt employer is an employer not required to make mandatory contributions for a particular employee because that employee is exempt. The employer may still have other obligations, including enrolling other employees who are not exempt.

Take a part-time employee earning HK$5,000 per month. The employee is an exempt employee for the employee contribution. The employer is an exempt employer only for that employee’s contribution, but must still contribute 5% of the employee’s relevant income (HK$250 per month). The employer must also enrol the employee in an MPF scheme within 60 days, even though the employee contributes nothing.

ORSO and MPF Exemption

The ORSO (Occupational Retirement Schemes Ordinance) exemption is one of the most common grounds for MPF exemption. An employer may operate an ORSO scheme that provides retirement benefits. If the ORSO scheme holds an exemption certificate from the MPFA, employees who are members of that scheme are exempt from MPF enrolment for that employment.

The exemption applies only to the employment covered by the ORSO scheme. An employee who works for another employer without an exempt ORSO scheme must be enrolled in an MPF scheme for that other employment.

Consult the MPFA’s guidelines on exemption certificates before relying on an ORSO scheme. The ORSO scheme must meet certain requirements, including providing benefits at least equivalent to MPF benefits.

Practical Implications of Exemption

Exemption from mandatory MPF contributions leaves several obligations intact:

• Employer contribution for low-income employees: The employer must contribute 5% of the employee’s relevant income even if the employee contributes nothing.
• Enrolment deadline: Enrol the employee within 60 days, even if the employee is exempt from contributing.
• Record keeping: Maintain records of the exemption category and the contributions made, if any.
• Voluntary contributions: Exempt employees may still choose to make voluntary contributions to an MPF scheme, subject to the scheme’s rules.

Verify exemption status at the start of employment. Review it periodically. Changes in income, employment status, or ORSO membership may affect exemption eligibility. The MPFA provides a helpline and online resources for checking exemption rules.