MPF Retirement Fund in Hong Kong​

Key Takeaways for Founders

• Accounting is the highest-stakes risk. Download the monthly eMPF contribution report and the matching bank statement every single month. Do not wait until year-end.
• You choose the single MPF trustee for the company. Employees default into it. Under the Employee Choice Arrangement they can move only their own mandatory contributions once a year; your employer portion stays locked until they leave.
• Employer mandatory (and voluntary) contributions are fully deductible under Section 16(1)(h) of the Inland Revenue Ordinance, capped at 15% of the employee’s total annual emoluments.
• Since 1 May 2025, mandatory MPF can no longer be used to offset Severance Payment or Long Service Payment for service after the transition date. Founders must maintain a separate cash reserve for these liabilities.
• Choosing a stronger trustee costs you nothing extra beyond the mandatory contribution and improves employee experience and first impressions.

MPF for Hong Kong Founders & Entrepreneurs: Why Accounting Proof Matters More Than Most Guides Admit

Most MPF articles simply restate the law. Almost none explain the real cost to founders: forgetting to record the employer contribution properly in the accounts and audit file.

This guide is written specifically for founders and entrepreneurs. From our experience handling the books of thousands of Hong Kong companies, the single most common and expensive mistake is treating MPF as “something HR handles.” Founders correctly record salary and employees’ compensation insurance, then quietly omit the employer MPF contribution. That omission forfeits legitimate tax relief that can easily run into tens of thousands of dollars a year.

Why MPF Is a Founder Decision, Not Just an HR Task

If you previously worked as an employee, you already know the irritation: every MPF fund charges an administration fee whether the portfolio rises or falls. The system forces people to save and invest. That design has real societal value, Hong Kong households have historically shown stronger savings discipline than many Western economies, but as a founder you now sit on the other side of the table.

You select the scheme, you pay the employer share every month, and you shape the default experience of every new hire. Employees are one of your biggest assets. Treating MPF as pure compliance is a missed opportunity on talent, culture, and tax.

How MPF Actually Works When You Hire

Both employer and employee must contribute 5% of the employee’s relevant income (wages, bonuses, commissions, allowances, etc.), subject to the following statutory thresholds:

Monthly Relevant Income	Employer Contribution	Employee Contribution
Less than HK$7,100	5% of income	None required
HK$7,100 – HK$30,000	5% of income	5% of income
More than HK$30,000	Capped at HK$1,500	Capped at HK$1,500

You must enrol every eligible employee (full-time or part-time, aged 18–64, employed for 60 days or more) within 60 calendar days of the start of employment. New employees receive a contribution holiday on their share for the first 30 days plus any incomplete wage period that follows. You as employer have no holiday period, your contributions start from day one. Contributions are due by the 10th of the following month (or the next working day if the 10th falls on a holiday).

Hong Kong has completed its migration to the eMPF Platform, managed by the eMPF Platform Company Limited (a subsidiary of the MPFA). All trustees now operate under one government-backed digital portal, so you no longer need multiple logins. However, old bank Direct Debit Authorizations did not automatically migrate. Founders must manually set up new Direct Debit Authorizations (DDAs) on the eMPF Platform for each scheme.

There are three main scheme types: Master Trust schemes (by far the most common), Employer-sponsored schemes, and Industry schemes (mainly for casual workers in catering and construction).

The Accounting Reality Most Guides Never Mention

This is the section that actually moves the needle for founders and is almost completely absent from other MPF content.

Exact working example
Assume a company with 10 employees each earning HK$30,000 per month.
Employer contribution = HK$1,500 × 10 = HK$15,000 per month.
Annual cost = HK$15,000 × 12 = HK$180,000.

If the company does not claim offshore exemption and pays Hong Kong profits tax:

• At the 8.25% lower tier: HK$180,000 × 8.25% = HK$14,850 tax saving.
• At the 16.5% standard rate (when profits exceed HK$2 million): HK$180,000 × 16.5% = HK$29,700 tax saving.

These amounts are deductible under Section 16(1)(h) of the Inland Revenue Ordinance, subject to a maximum of 15% of each employee’s total annual emoluments. For a startup or SME, HK$29,700 is material, enough for a meaningful year-end gift, a small team bonus, or simply retained cash in the business.

From our work with thousands of clients, many founders only discover the missing employer MPF line when the accountant asks for supporting documents at audit time. By then the records are incomplete, the deduction is at risk, and extra time (and fees) are spent reconstructing the figures. The solution is straightforward and non-negotiable:

1. Every month, log into the eMPF Platform and download the official contribution report.
2. Download the corresponding bank statement that proves the payment left your company account.
3. Immediately record the employer portion as an operating expense in your books.
4. File both documents in a dedicated folder. Do not rely on “HR will handle it later.”

You should also keep every other legitimate business expense properly documented (especially if you are not claiming offshore exemption). Correctly recorded expenses reduce taxable profits. Prepayment of mandatory contributions is permitted in certain situations; if you prepay, document the prepayment cleanly so it is treated as a mandatory contribution when it crystallises.

How to Choose a Trustee – Practical Criteria for Founders

You select one scheme. All future monthly contributions (yours and the employees’) default into it. Employees can later exercise the Employee Choice Arrangement once a year and transfer only the portion derived from their own mandatory contributions. Your employer contributions remain locked in the original scheme until the employee leaves. That structural reality is why the initial choice matters.

Evaluate trustees on three practical dimensions:

1. Market coverage and diversification

Does the scheme mainly offer Hong Kong equity funds, or does it also provide meaningful access to US equities, global equities, China A-shares, bonds, and mixed-asset funds? Broader geographic coverage allows employees (and you, if you make voluntary contributions) to reallocate when one market is underperforming. More options are not automatically better, quality and cost still matter, but limited exposure increases concentration risk

2. Administration fees (Fund Expense Ratio)

Every fund charges fees regardless of performance. Compare the ongoing Fund Expense Ratio (FER) across similar fund categories. Lower fees compound significantly over a 10- or 20-year horizon.

3. Long-term net-of-fee performance by market specialty

Some trustees have historically performed better in Hong Kong equities; others show stronger results in US or global mandates. Review multi-year net returns on the official MPFA Fund Platform and independent comparisons rather than marketing materials.

Major approved trustees include HSBC, Manulife, AIA, BOCI-Prudential, Bank Consortium Trust and others. Always check the latest MPFA register and current fund fact sheets. A reputable, reasonably priced scheme with solid coverage also creates a better first impression for new hires, a zero-extra-cost improvement to the employee experience.

Offsetting Abolition – Critical Cash-Flow Change Since May 2025

From 1 May 2025, employers can no longer use mandatory MPF contributions to offset Severance Payment or Long Service Payment for periods of service after the transition date. Because mandatory MPF no longer acts as a financial cushion for these post-May 2025 liabilities, founders must build and maintain a separate cash reserve for statutory SP/LSP risks. Voluntary employer contributions above the mandatory level may still be usable for offsetting if the scheme rules allow, but do not rely on the mandatory pool.

Practical Founder Checklist

1. Configure your company account on the eMPF Platform and set up new Direct Debit Authorizations (old DDAs did not migrate automatically).
2. Select the trustee using the market coverage, fee and performance criteria above.
3. Enrol every eligible employee within 60 calendar days.
4. Remit contributions by the 10th of each following month.
5. Every month download the eMPF contribution report and the matching bank statement, then record the employer portion as an expense.
6. At year-end, ensure the full employer MPF amount appears in the audit file so the deduction under Section 16(1)(h) is claimed in full.
7. Maintain a separate cash reserve for potential SP/LSP after the offsetting abolition.

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Frequently Asked Questions