MPF vs ORSO: what’s the difference?

Ah Chik’s company offers both MPF and provident fund schemes, and HR has asked him to brief the new joiners. Both exist for retirement — but one is statutory, the other voluntarily set up by the employer, and the fine print differs.

What is the difference between MPF and ORSO?

The key difference between MPF and ORSO lies in how they are set up: a provident fund (an ORSO occupational retirement scheme) is a retirement plan an employer voluntarily established before the MPF system began in 2000, with terms set by the employer; the MPF is a statutory mandatory system in which both employer and employee must contribute, with contributions vesting in the employee immediately and in full.

Contributions: who pays, how much

Provident fund terms — contribution amounts, plan membership, fund portfolios — are all set by the employer, which may even contribute unilaterally. Under the MPF, employer and employee alike must make mandatory contributions; employees earning below HK$5,000 a month (raised to HK$6,500 from 1 November 2011) are exempt from employee contributions.

Vesting: how much you keep when you leave

Provident fund schemes commonly set a “vesting scale”: employees with short service may recover only part of their accrued benefits on departure. Under the MPF, mandatory contributions from both sides vest in the employee immediately and in full once paid to the trustee — though they can only be withdrawn at 65, or under five specific statutory grounds.

Investment choice: who decides

Provident fund investment arrangements are set by the employer; under the MPF, the employee picks a fund portfolio from the trustee and scheme the employer has chosen. Ah Chik’s reminder: read both sets of terms before choosing. MPFA hotline: 2918 0102.

For the basics of how the MPF works, see the MPF education hub.