MPF Contribution Calculation Special Case (Employees aged under 18 and over 65)

MPF Contribution Calculation Special Case (Employees aged under 18 and over 65)

Chapter catalogue

  1. What is MPF?
  2. How is MPF calculated?
  3. MPF calculation special cases
  4. What about the general cases?
  5. Advantages Workstem brings to you

What is MPF?

The Mandatory Provident Fund was formally implemented in December 2000, which is a mandatory saving retirement protection system to ensure that the majority of Hong Kong people save for the future. With the exception of a few groups of people, when an employee’s salary meets the MPF contribution criteria, both the employer and the employee should contribute to a fund in accordance with the rules, which can be withdrawn after the employee reaches the age of 65 for retirement purposes.

How is MPF calculated?

The employees aged 18 to 65 in Hong Kong are required to enroll in an MPF scheme.  Based on information provided by the MPFA, the following table is a guide for monthly-paid employees to calculate their contributions.

Monthly salary Employer Employee
Less than HK$7,100 5% of monthly relevant income 0
HK$7,100 – HK$30,000 5% of monthly relevant income 5% of monthly relevant income
More than HK$30,000 HK$1,500 HK$1,500

The following articles on MPF have been collected by Workstem for you. Just click on the subject to view them.  

The Most Used Hong Kong MPF Calculation Formula

Should Part-time Employees also Enroll in the MPF Plan?

How to Calculate the Amount of MPF Contributions for Non-monthly-paid Employees?

No Need to Enroll Employees in an MPF Scheme if They Are Employed Less Than 60 Days?

Non-“418”-rule Employees No Need to Enrol MPF Scheme?

How to Calculate MPF Contribution for a New Employee?

Now you’ve read enough about MPF contributions. By the way, there are certain cases that even battle-hardened HR people have a headache about. Take a look at a once-in-a-century MPF calculation special case! 

MPF calculation special cases

Case 1:

Jayson is a new college student. In order to enrich his holiday life, he applied for a job as a salesman in a supermarket and started his job on May 18th with a monthly salary of HK$10,000. Due to academic reasons, Jayson had to quit around his birthday on July 18th. 

  • If Jayson leaves on July 17th, he will have worked for less than 60 days and is under 18 years old. Then neither the employer nor the employee is required to contribute according to the Employment Ordinance.
  • If Jayson leaves his job on his birthday (i.e. July 18th), which is also the day when he has been employed for 60 days, according to the Employment Ordinance formula: HK$0000/31*18 (actual working days) =HK$5860.4<HK$7100, so he is not required to make MPF contributions.

However, as Jayson has reached the age of 18 and has worked for 60 days on July 18th, the employer is required to make MPF contributions as follows:

HK$10000/31 (day)*1 (day)*5%=HK$16.12

  • If Jayson decides to leave on September 1st, he will be required to make MPF contributions under the Employment Ordinance. The calculation method is as follows:

HK$10000*5% (August)=HK$500

Employers’ MPF contributions are calculated as follows:

HK$10000/31*14 (actual working days in July)*5%+HK$10000*5% (August)+HK$10000/30*1 (actual working days in September)*5%=HK$225.80+HK$500+ HK$16.67=HK$742.47 (According to the Employment Ordinance, the employer should make up the previous MPF contributions)

*Note: Both July and August have 31 days and September has 30 days. So the average daily wage is calculated differently. 

Case 2:

David, who is almost 65 years old, is helping out at his son’s new Teochew Chinese restaurant and officially started his job on March 20th, 2021. His son gave him a salary of HK$10,000 per month and planned to let him retire on May 18th when he was 65 years old.

  • David was an HR when he was young and knows about the Employment Ordinance. He said that he decided to leave on May 17th because he didn’t want his son to make more MPF contributions for him when the restaurant started. Therefore, according to the Employment Ordinance, David  worked for 59 days in total, which is less than 60 days, and neither the employer nor the employee need to contribute.
  • If David leaves his job on May 18th, he would have worked for 60 days in total and turned 65 years old. He thought that his son still needed to make contributions. But when he looked through the Employment Ordinance, he found that although the employer had to make contributions if the employee left after working 60 days, neither of them had to pay on that day because he was over 65. That is, neither the employer nor the employee is required to contribute.
  • If David chooses to leave on July 1st, he will have been employed for more than 60 days and be 65 years old. Then the employee is not required to make contributions on June while the employer should make all MPF contributions from 20th March to 17th May,

i.e. (11+17) *10000/31*0.05+10000*0.05=951.6

What about the general cases?

Kevin started his job as a design director in a network design company on January 23rd, 2021 with a monthly salary of HK$10,000.    

Employed for more than 60 days: employer and employee’s contribution is 5% of relevant income for the current month

    Employer’s contribution: HK$10,000*5%=HK$500;

    Employee’s contribution: HK$10,000*5%=HK$500

Employed for 60 days sharp: April 24th is the day when the employee has been employed for 60 days, so the MPF contribution on April shall be calculated as follows,

     Employer’s contribution: (April) HK$10,000*5%+ (March) $10,000*5%+ (6 days in February) +HK$10,000/28*6*5%=HK$500+HK$500+HK$107=HK$1,107

     Employee’s contribution: HK$10,000*5%=HK$500

Employed for less than 60 days: Neither employer nor employee is required to contribute.

Advantages Workstem brings to you

To sum up, it is easy to see that the calculation of MPF contributions is complicated and prone to error due to the diversity of employees’ ages and length of employment. But in either case, Workstem can quickly, accurately and efficiently calculate the employer’s and employee’s MPF contributions in just three simple steps. Monthly contribution records can also be provided. 

*According to the Employment Ordinance,an employer should provide a monthly contribution record showing the following information to the employee within seven working days after monthly payment of contributions to the assignee.

  • the employee’s relevant income
  • the amount of mandatory contributions made respectively by the employer and the employee
  • the amount of voluntary contributions (if any) made respectively by the employer and the employee
  • the date on which the contributions were paid to the assignee

Read More:  How to set up MPF

MPF and autopay reports

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