Employee Choice Arrangement cheat sheet: contributions, funds, withdrawals in one place

This article is a rewrite of a report from August 2012.

2012 was MPF’s busiest amendment year, with the Legislative Council passing the revision bill effective November. Media attention centred on the Employee Choice Arrangement (semi-portability), but the supporting changes mattered too — here is the updated cheat sheet.

Who must join MPF?

Full-time, part-time and self-employed persons employed 60 days or more who ordinarily live and work in Hong Kong. Construction and catering casual workers must join even under 60 days.

How are contributions calculated?

Employers and employees each pay 5% of relevant income. The maximum income level was revised to HK$25,000 a month, the minimum to HK$6,500, capping contributions at HK$1,250. “Relevant income” covers salaries, wages, housing and leave allowances, commissions, bonuses and the like; severance and long service payments excluded. Note: for the first 30 days of employment plus the first incomplete contribution period, the employer still pays while the employee does not; below HK$6,500 income the employee is exempt but the employer still pays 5%.

What fund types exist, and how do withdrawals work?

Five: conservative, guaranteed, bond, mixed-asset and equity funds. Hong Kong equity funds were the most popular, the best delivering 20% cumulative five-year returns. Benefits normally unlock at 65; early retirement at 60, total incapacity or permanent departure allow early release — but early withdrawal is a once-in-a-lifetime option, so think hard.