Withdrawal of accrued benefits from the MPF System is allowed when scheme members reach the retirement age of 65.

Defined contribution

Employees and employers who are covered by the MPF System are each required to make regular mandatory contributions calculated at 5% of the employee’s relevant income to an MPF scheme, subject to the minimum and maximum relevant income levels. For a monthly paid employee, the minimum and maximum relevant income levels are HKD 7 100 and HKD 30 000 respectively.

Accrued benefits in the MPF System are withdrawn in a lump sum when scheme members reach the retirement age of 65. For comparison with other economies, for replacement rate purposes the pension is shown as a price‑indexed annuity based on sex-specific mortality rates.

Targeted/Basic

The old-age allowance has two levels. Normal old age allowance (NOAA) is means-tested and provided to those aged 65 and over. For a single person, the asset limit is HKD 374 000 and monthly income limit is HKD 10 430 (after which benefits are withdrawn). Limits for married couples are higher (HKD 568 000 and HKD 15 810, respectively). The full benefit is HKD 3 915 per month, which is about 23% of average earnings.

Early retirement

For the MPF System, it is possible to withdraw the benefits from age 60 if ceasing employment permanently. However, the targeted/basic programme does not provide benefits until 65.

Late retirement

It is possible to combine working and receiving pension. For the MPF System, upon reaching age 65, if an individual continues to work, no further mandatory contributions will be required and the individual may withdraw the benefits derived from mandatory contributions.

Taxation of workers

Employees can claim tax deductions for their mandatory contributions made to an MPF scheme, to a maximum of HKD 18 000.

Taxation of worker’s income

The lower of the following two tax rules are applied. The first rule is described in the following tax schedule. This is applied to taxable income (after deduction and allowance). The basic allowance for a single person in 2022 is HKD 132 000:

Social security contributions payable by workers

The information of mandatory contributions made by employees and self-employed persons to the MPF System are provided in the section of “Defined contribution”.

Taxation of pensioners

There is no additional tax relief for pensioners.

Taxation of pension income

MPF benefits derived from mandatory contributions are not subject to tax on withdrawal (only lump sum withdrawal is allowed).

Social security contributions payable by pensioners

Pensioners do not pay any social security contributions.