Exemption threshold raised to $5,500: even low-income workers must join MPF

Unemployment has fallen to a two-and-a-half-year low, and some sectors are raising pay to keep staff — MPF contribution levels are being adjusted in step. Most controversial is the employee exemption threshold rising from $5,000 to $5,500 of monthly income: with the minimum wage in force, full-time workers earn at least $5,800 a month, meaning virtually every full-time employee will fall inside the contribution net.

What changed on the cap and the exemption floor?

The MPFA proposes raising the maximum relevant income from $20,000 to $30,000 and lifting the exemption threshold from $5,000 to $5,500 — both changes directly affect how much workers contribute each month. After the cap rise, employees pay at most $500 more a month; the exemption level, set at half of last year’s Q3 median income, is running ahead of inflation.

Why should low earners contribute at all?

A Sing Tao Daily editorial argues the new threshold sweeps all full-time workers into the net not because the bar was tightened, but because low earners’ incomes have risen. On the principle that everyone should save for their own retirement, asking minimum-wage earners to contribute modestly eases their future financial pressure — unless society agrees the government should provide them full retirement welfare instead.

Is there an alternative to compulsion?

The editorial suggests the government consider non-compulsory incentives to encourage low-income workers to make MPF their main savings vehicle. The Child Development Fund pilot, which matches savings for CSSA and low-income families, shows some of these households can save a little — with well-designed incentives, low-income groups can be part of MPF too.

To see how contribution rules affect your paycheque, visit MPF fund comparison or the MPF education hub.