MPF contribution calculator: cash allowances count as relevant income

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

With Hong Kong’s MPF maximum relevant income level rising to HK$25,000 a month from 1 June 2012, many workers want to know exactly what they will pay. Here is a worked example of the MPF contribution calculation — including a detail many miss: cash allowances count as relevant income, so employees should check their employer has included them.

How do you calculate MPF contributions?

MPF contributions are calculated at 5 per cent of “relevant income”, paid separately by employer and employee. Take Mr Chan: a HK$20,000 monthly salary plus a HK$4,000 housing allowance gives relevant income of HK$24,000; from 1 June 2012, his and his employer’s mandatory contributions each rise from HK$1,000 to HK$1,200 (HK$24,000 × 5%). If his contribution stays at HK$1,000, the allowance may have been left out — he should check with his employer.

What counts as “relevant income”?

Under the MPF legislation, relevant income means any wages, salary, leave pay, fees, commissions, bonuses, contract gratuities or allowances paid in money by the employer — including housing allowances and other housing benefits. In short, it is not just basic salary; cash allowances count too.

Worked examples

What about the self-employed?

Self-employed persons who need to raise their mandatory contributions will be contacted by their trustees with the new arrangements. They can also review their own relevant-income declarations — anyone earning above HK$20,000 a month or HK$240,000 a year who has not been contacted should call their trustee. The MPFA website and trustee hotlines carry full details.