MPFA Proposes Raising MPF Floor to HK$5,500, Ceiling to HK$30,000 in Stages

In February 2011 the MPFA tabled its latest review report to the Legislative Council, proposing to lift the monthly minimum relevant income for MPF contributions from HK$5,000 to HK$5,500, and the maximum from HK$20,000 to HK$30,000 in stages via three phase-in options. Labour groups slammed the floor as too low to keep up with the minimum wage arriving that May — forcing grassroots workers into what they called “universal contributions”.

Why only HK$5,500 for the floor?

The MPFA says it reflects the Census and Statistics Department’s latest wage data; labour groups call it a half-hearted move. An earlier proposal of HK$5,250 was revised to HK$5,500. About 83,400 employees and self-employed persons earning HK$5,000–5,500 would be freed from contributions, cutting total monthly contributions by HK$22 million. Assuming 30 years of contributions at a 5.1% annual return, affected employees would have HK$221,000 less at retirement.

What are the three options for the HK$30,000 ceiling?

All phase the rise in over several years — the more stages, the smaller the gain for members. Annual steps of HK$2,500 or HK$5,000 would affect an estimated 476,000 people. Federation of Hong Kong Industries vice-chairman Daniel Lau suggested raising it to HK$25,000 first and reviewing later, rather than jumping straight to HK$30,000 and loading costs on employers.

Why is labour so unhappy?

Because once the minimum wage took effect on 1 May 2011, grassroots monthly pay would reach at least HK$5,824 — above the HK$5,500 contribution floor. FTU legislator Wong Kwok-kin accused the MPFA of engineering “universal contributions”, docking 5% of even minimum-wage pay. The HKCTU’s Cheung Lai-ha demanded the floor be pegged to the minimum wage; the FLU’s Ng Wai-yee pushed for HK$6,000. The MPFA replied that minimum wage is hourly-based and, without standard working hours, a matching monthly floor is hard to set. Compare MPF funds’ fees and returns at MPF fund comparison.