The Mandatory Provident Fund (MPF) is a compulsory pension fund designed by the Hong Kong government as a major protection scheme for the aged and retired residents. Most employees and their employers are required to contribute monthly. A 2012 study by the Consumer Council shows that almost half of the MPF funds have posted losses in each of the past five years.
Labour advisory panel backs MPF changes
Panel supports move that will put more money into 70,000 low income earners' pockets, but the higher earners will have to contribute more
A government advisory body has backed a plan that would save 70,000 low-income people from having to contribute to their MPF accounts while 400,000 would have to pay more.
The Labour Advisory Board yesterday supported the Mandatory Provident Fund Schemes Authority's plan to raise the minimum monthly income at which workers have to pay into the scheme.
The board agreed the minimum income before workers must contribute 5 per cent should rise from HK$6,500 to HK$7,100.
This would mean about 70,000 people would not have to contribute, which would see HK$23 million less flowing into MPF accounts each month.
Employer representative Stanley Lau Chin-ho said the change reflected the new minimum wage of HK$30 an hour, which is expected to be implemented in May.
On the other hand the board also agreed that workers on higher wages will have to make the 5 per cent MPF contribution on their income up to HK$30,000, rather than the present HK$25,000 ceiling.
This would mean 400,000 people will have to contribute up to HK$250 a month more into their accounts, adding about HK$200 million to the MPF accounts under this level.
The board's employer and employee representatives agreed on the changes, but differed on when they should be put into practice.
"This level and the maximum monthly income level should both become effective in June, a month after the new minimum wage level is expected to be implemented," employee representative Ray Lee Tak-ming said.
Lau said the change shouldn't become effective until November. This would be two years after the minimum monthly income level was lifted from HK$5,000 to HK$6,500.
Lau said raising the top level would burden companies, but he agreed there was a need to review this level periodically.
But it should not be introduced until June next year, exactly two years after the level was raised from HK$20,000 to HK$25,000.
Lee noted that the changes did not need to be passed by the board.
The MPFA was only seeking the board's views on the proposals. The authority will continue to gather opinions from more advisory boards on the proposed increases.