Contribution Period and Contribution Amount

December 26th, 2018. 07:07 pm

Contribution Day and Employee’s Contribution Holiday

On or before each contribution day, the employer is responsible for contributing the mandatory amount to the trustee of the MPF scheme. In general, for employees who are paid monthly, the contribution days falls on the tenth day of the month. For example, the contribution of your August salary should be made by your employer on or before 10 September.  The mandatory contribution is made up of a portion from the employer and a portion from the employee, which is deducted from the employee’s August salary.

 

For employees, there is a contribution holiday. They are not required to make contributions for the first 30 days of their employment, or for the first incomplete payroll period that immediately follows the 30-day period and the calendar month in which the 30th day of the employment falls.

 

For example, Ms. Chan begins her new job on 5 May. For the period between 5 May and 4 June, i.e., the first 30 days of her employment, she does not have to make a contribution to her MPF scheme. Moreover, since 4 June is her 30th day of employment, the rest of the month of June is an incomplete payroll period. For that reason, Ms. Chan is not required to pay the employee’s portion of the MPF contribution for the month of June, either.

 

Contribution amount

 

How much you contribute to your MPF account depends on your monthly relevant income, which includes any wages, salary, leave pay, fee, commission, bonus, gratuity, but not severance payments or long service payments under the Employment Ordinance (Cap. 57). The calculation of the contribution amount is subject to a minimum and a maximum level of relevant income. For employees who are paid on a monthly basis, they are respectively $7100 and $30000 per month. In other words, if the monthly income is lower than $7100, the employee is not required to make any contribution. If the monthly income is between $7100 and $30000, the employee has to contribute 5% of what he or she earns. If the monthly income is over $30000, no matter what the exact amount may be, the contribution amount of the employee is 5% of $30000, that is $1500.  The table below shows the monthly contribution amount of the employer and the employee at different income level:

 

Monthly Relevant Income Employer’s mandatory contributions Employee’s mandatory contributions
Less than $7,100 Employee’s relevant income x 5% Not required
$7,100 – $30,000 Employee’s relevant income x 5% Employee’s relevant income x 5%
More than $30,000 $1,500 $1,500

 

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