In this Nov 29, 2000 photo, a mandatory provident fund (MPF) poster adorns the window of a bank in Hong Kong. (FREDERIC BROWN / AFP)
Hong Kong Chief Executive John Lee Ka-chiu announced that the Mandatory Provident Fund (MPF) offsetting arrangement will cease from May 1, 2025.
He made the announcement at a May Day reception held by the Labor Department on Friday.
“In conjunction with the cancellation of the MPF offsetting arrangement, the government will design and implement a government-funded plan to provide employers with a total of more than HK$33 billion ($4.2 billion) in subsidies for 25 years, for sharing the employers’ burden of paying the severance payment and the long service payment. That can assist businesses in adapting to policy shifts,” Lee said.
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Secretary for Labor and Welfare Chris Sun Yuk-han said that the authorities will report to the relevant committees of the Legislative Council as soon as possible, and seek funding from the Finance Committee, which renders funding to the business community and funding for establishing an information technology platform.
The Legislative Council passed the Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Bill 2022 in June last year. The legislation prohibits employers from using the accrued benefits of their mandatory contributions under the MPF to offset employees’ severance and long service payments. Due to the far-reaching impact of the legislation, the government previously did not specify a date for the measure, beyond saying that it would be implemented no later than the end of 2025.