MPF contribution cap rise to $25,000 faces fierce SME resistance

The Legislative Council subcommittee on MPF amendments will hold a public hearing this Friday (29th) on the government’s proposal to raise the contribution income cap from $20,000 to $25,000. If implemented mid-next year, over 510,000 contributors would be affected — but SME employers are dead set against it, fearing a jump in wage costs.

What is the proposed MPF contribution increase?

The government proposes lifting the monthly income cap from $20,000 to $25,000, while business chambers such as the Chinese General Chamber of Commerce lobby to trim the floor from $25,000 to $22,000. MPFA non-executive director Wong Kwok-kin notes the subcommittee is only deliberating for now; a final vote waits until LegCo reconvenes in October, leaving room for negotiation.

Why do employers object?

Hong Kong SME Association honorary president Wu Hongbin cites two reasons: the unresolved knot of high MPF management fees and low returns means “compulsory” contributions should not rise to enrich fund managers; and with soaring rents plus the new minimum wage, employers are already stretched — higher contributions could trigger a wave of closures. Among the four major chambers, only the Federation of Hong Kong Industries calls the new level acceptable.

Does any employer support it?

The employers’ federation representing nearly 500,000 workers does not object in principle: it strengthens members’ retirement protection, the cap has not moved in 10 years, and phased implementation softens the blow. Its members include HSBC and Jardines, each employing over 10,000 staff. A DAB survey also found fewer than 2% of SME staff earn over $20,000 a month, so the cost impact may be limited.

To see how the cap affects you, visit MPF fund comparison or the MPF education hub.