Why Adjust MPF Contribution Caps and Floors?

Why Adjust MPF Contribution Caps and Floors?

On 14 June 2011, the government proposed raising the minimum relevant income from HK$5,000 to HK$6,500 (from 1 November 2011) and the maximum from HK$20,000 to HK$25,000 (from 1 June 2012). The higher floor freed another 180,900 employees and self-employed from contributing; the higher cap meant 514,500 would contribute more.

Why raise the floor?

To match the minimum wage: after its launch, low-paid workers earned at least HK$5,874 — without a higher floor they’d fall into the contribution net and end up worse off. An earlier HK$5,500 proposal drew fire, so the government went to HK$6,500.

Why cap the ceiling at HK$25,000?

Three MPFA reviews said HK$30,000, but employers feared the cost; the government compromised at HK$25,000 and deferred it to June 2012 for adjustment time. The ceiling had never moved since 2000.

What did it mean for workers?

Low earners exempt, high earners paying more. Contributing more makes fund choice matter more — compare funds.