Fired, rehired? How Hong Kong bosses plan to save money as MPF mechanism ends

Employers can no longer dip into staff pensions to cover severance and long-service payments, as firms deploy strategies to mitigate impact

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City leader John Lee visits frontline workers at Hong Kong International Airport. Photo: Handout

Published: 11:00am, 1 May 2025Updated: 5:22pm, 2 May 2025

The abolition of a controversial mechanism that allowed bosses to dip into staff pensions finally took effect on Labour Day, with Hong Kong’s leader calling it “good news” for the city’s 3 million workers.

Following a recent visit to frontline workers at Hong Kong International Airport, Chief Executive John Lee Ka-chiu said in a social media post on Thursday that employees were better protected under the new pension arrangement.

Starting on May 1, employers can no longer use the Mandatory Provident Fund (MPF) contributions for their staff to cover severance and long-service payments. The Legislative Council in 2022 passed a bill to ditch the mechanism, signalling an end to a lengthy tussle between employers and unions over the issue.

Lee visited the airport workers at a time when the United States has imposed tariffs on its trade partners, including Hong Kong and mainland China, disrupting supply chains worldwide.

“There are opportunities and challenges, which Hong Kong will strengthen [with its] seven-pronged strategy to cope with the tariffs,” he said, pointing to approaches such as riding on mainland China’s development, fostering international collaboration and speeding up industrial upgrade.

After a recent visit to Hong Kong International Airport, city leader John Lee has said employees will be better protected under the new pension arrangement. Photo: Handout

Some Hong Kong industries said they were prepared for the new pension regime.