Hong Kong abolished the Mandatory Provident Fund (MPF) offset mechanism yesterday (1 May), benefiting over 3 million workers by improving retirement security. The government will provide a 25-year, HK$330 billion subsidy to help employers manage additional costs.
Boost for Retirement Savings
Labour and Welfare Bureau Secretary Chris Sun Yuk-han said the policy ensures employees’ MPF savings remain intact despite job changes. For example, an employee earning HK$18,000 monthly, working 40 years with a 2% annual MPF return, could save HK$650,000 by age 65—savings previously at risk under the offset system. In the first three years, employers’ liability for long-service payments and severance fees is capped at HK$3,000, with government subsidies covering the rest.
Employer Cost Concerns
Lawmaker Lam Chun-sing warned that after subsidies end, some employers might dismiss staff to avoid long-service payments, potentially sparking disputes. Wong Kwok proposed government-covered MPF contributions for low-income workers to aid 300,000 employees.
SME Costs to Rise
Hong Kong Small and Medium Enterprises Association President Kwok Chi-wah estimated a short-term cost increase of up to 6% for businesses. However, he said employers value staff and are unlikely to cut jobs, urging firms to build reserves during the subsidy period.
Government Support
Chief Executive John Lee Ka-chiu hailed the policy as a win for workers, with the HK$330 billion subsidy easing employer burdens. He urged businesses to enhance workplace practices to support employee rights.
The policy strengthens retirement protections while balancing employer needs through government support.