Under the Mandatory Provident Fund Schemes Ordinance (Cap 485) (MPFSO), employers and employees in Hong Kong are each required to make a monthly contribution of 5 percent of the employees' relevant income to a MPF Scheme. However, this is subject to the minimum and maximum levels of relevant income, which currently stand at HK$7,100 and HK$30,000 respectively.

An employee whose relevant monthly income is less than the minimum level is not required to make any contribution, even though his employer remains obliged to do so. Meanwhile, where the employee's relevant income exceeds the maximum level, the employee, together with his employer, will not be required to contribute for the portion in excess of HK$30,000. Therefore, they will each be required to pay the maximum monthly contribution, i.e., HK$1,500.

Pursuant to section 10A of the MPFSO, the Mandatory Provident Fund Schemes Authority (the "MPFA") is required to conduct a review of both the Minimum and Maximum Relevant Income every four years. The MPFA has kick-started the said review and will submit its proposal to the Government for consideration by July 2018.

In considering whether the relevant income levels should be adjusted, the MPFA must observe the following factors under section 10A:

  • in respect of the Minimum Relevant Income, 50 percent of the monthly median employment earnings prevailing at the time of review; and
  • in respect of the Maximum Relevant Income, monthly employment earnings at 90th percentile of the monthly employment earnings distribution prevailing at the time of the review.

The MPFA now proposes to increase both the Minimum Relevant Income and Maximum Relevant Income to HK$8,000 and HK$45,000 respectively. If the proposal is adopted by the Government, an employee whose monthly relevant income exceeds HK$45,000 (together with his employer) would need to pay up to HK$750 more mandatory contributions per month to the MPF scheme.

The MPFA is currently seeking views from the stakeholders on the implementation arrangement of the Maximum Relevant Income, in particular whether it should be adjusted upwards in one go, or progressively in two or three phases.

Visit us at www.mayerbrownjsm.com

Mayer Brown is a global legal services organization comprising legal practices that are separate entities (the Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2018. The Mayer Brown Practices. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.