bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

authorLocations

authors

corrections

sponsorType

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

quizIds

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

paywallTypes

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Quinton Chan

Raymond Ma

Upper limit for pension fund contributions may be raised to HK$25,000 to mirror pay increases

The cap for mandatory provident fund contributions is set to be increased next year in response to a general rise in salaries.

Sources close to the Mandatory Provident Fund Authority said proposals had not been finalised, but officials were considering raising from HK$20,000 to HK$25,000 the maximum amount of monthly salary to which the MPF applies.

The lower threshold of HK$5,000 - the minimum amount someone must earn before having to pay contributions - is not expected to be revised.

A timetable has not been confirmed, but a bill is expected to be introduced in the Legislative Council next year to effect the legislative changes.

Under the  present regime, workers and their bosses both pay 5 per cent of their salary or HK$1,000, whichever is lower, into their MPF each month.

If the salary cap is raised to HK$25,000, a person would pay up to an extra HK$250 a month.

Assuming  someone joins the scheme at  21 and achieves a slightly optimistic investment return of 4 per cent per year, if the cap is raised, the person  would have an extra HK$720,000 on retirement at 65.

The move follows a proposal by the authority's advisory committee in September to raise the contribution cap to HK$30,000 to compensate for rising wages. Official figures show there were nearly 760,000 people in Hong Kong who were earning at least HK$20,000 a month at the end of June.  This is a rise of 13 per cent over six years ago when the scheme was launched.

The Financial Services and the Treasury Bureau said it would study the authority's report.

'It should be noted that any revision to the relevant income levels would require Legco's approval. We will report the matter to Legco in the next few months,' a spokeswoman said.

The Employers' Federation said it was not strongly opposed to an increase in the cap but called on the government to explain the factors considered in determining whether an adjustment was needed.

'The actual additional contribution amounts we are looking at are very small, but there should be an objective mechanism to calculate why and how much the contribution thresholds are adjusted. Transparency is critical,' a federation spokeswoman said.

A spokesman for the Mandatory Provident Fund Authority said  it was required to review at least once a year the income bracket under which employees pay into the scheme.

Advisory committee chairman Nelson Chow Wing-sun  welcomed the increase, noting that salaries had been going up for the past two years.

The principle under which the MPF operates is that at least 90 per cent of the scheme's members should contribute 5 per cent of their total income.

Because total incomes had risen, this proportion had dropped to around 82 per cent, Professor Chow said.

He said the advisory committee might discuss the issue at its meeting next month.

Leung Fu-wah, vice-chairman of the Hong Kong Federation of Trade Unions,  said most people should be able to afford to set aside an extra HK$250 for retirement. 'I can accept HK$25,000,' he said.

Confederation of Trade Unions general secretary Lee Cheuk-yan  said he also accepted an increase in the salary cap, but  the lower threshold should be raised at the same time to benefit the poor.



Higher salary cap for MPF proposed