Nearly 500,000 workers earning more than HK$30,000 a month would pay more into their mandatory provident fund accounts under proposed changes.
The current income limit for the MPF is HK$30,000, meaning those who earn that amount or more pay a maximum of HK$1,500 into their MPF accounts per month.
It is understood that the Mandatory Provident Fund Schemes Authority has proposed increasing the income limit in two phases.
The limit would be raised to HK$39,000 in the first two years, meaning workers will have to pay up to HK$1,950 a month – or 30 percent more than the current rate. Employers would do the same.
In the second stage it would further increase to HK$48,000, meaning people will have to pay up to HK$2,400 a month – or 60 percent more.
It is understood that the minimum income level for MPF contributions would also increase to HK$8,250 from the current HK$7,100. In other words those earning less than HK$8,250 will not need to make any employee’s contribution. However, employers will still need to pay for their employees.
The MPFA said it has submitted the review, which will affect some 490,000 workers, to the government, which will make an announcement once a decision is made. The Financial Services and the Treasury Bureau the review report of the MPFA has been received.
The labor sector welcomed the proposed adjustments. Their lawmaker Poon Siu-ping, who is also a non-executive director of MPFA, supported the proposal of raising the income levels, saying it can enhance the retirement protection of employees. Poon believed there may be some opposition regarding the maximum income level but added adjusting the income limits in two phases can relieve the pressure for both employers and employees.
Another labor sector lawmaker, Michael Luk Chung-hung from the Federation of Trade Unions, also said the retirement protection of employees would be better with the new adjustment.
“Many people get a pay rise. If there is no adjustment on the maximum income level, for those who have a higher salary, their MPF contributions would be disproportionate to their incomes,” he said.
Luk said employees would still want their MPF to have better investment returns with lower charges.
The business sector thinks raising the income limit would further increase the burden on employers.
Liberal party lawmaker Felix Chung Kwok-pan described the proposal as unreasonable and urged the government to put this on hold since the final decision on the MPF offsetting scheme has not been decided.
He added that employers would have to pay more with the cancellation of the MPF offsetting mechanism and the increase of MPF contributions in the future.