Three myths about the MPF contribution cap: HK$1,250 doesn’t mean only HK$25k earners pay

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

MPF contribution levels were set to change on 1 June 2012: maximum relevant income rising from HK$20,000 to HK$25,000 a month, and the mandatory contribution cap from HK$1,000 to HK$1,250. The MPFA found employers and employees widely misunderstood the change — this piece dismantled the myths around the MPF contribution cap.

Myth 1: no contribution if you earn under HK$25,000?

Wrong. The change only moved the maximum relevant income from HK$20,000 to HK$25,000; employees earning HK$6,500 or more a month (under 65) still contributed. Those at HK$20,000 or below kept the same 5 per cent arrangement.

Myth 2: is the cap an income ceiling?

No. Mandatory contributions for employers, employees and the self-employed ran at 5 per cent of “relevant income”: below HK$6,500, employees paid nothing (employers still did); between HK$6,500 and HK$25,000, 5 per cent of actual income; above HK$25,000, the monthly HK$1,250 cap applied.

Myth 3: a mid-June pay rise — how is June’s contribution calculated?

No splitting needed. Contributions were calculated by contribution period: any period starting on or after 1 June 2012 used the new rules throughout — income above HK$20,000 contributed 5 per cent up to the HK$25,000 ceiling, i.e. HK$1,250, with no need to split the month around 1 June.

Covering the same revision as companion pieces, this version’s angle was “myth-busting”: the three most common misunderstandings, cleared up in one go.