Content Outline
Coverage And Enrollment
1. Who is a self-employed individual in the MPF System?
If you are earning your income from the production of or trading of goods or services, and you are not an employee, you are most probably a self-employed person. Generally, the sole proprietors and partners in a partnership business are self-employed individuals.
2. If I am both a self-employed person and an employee, what should I do?
You will be the owner of two MPF scheme memberships:
- as a self-employed individual, you have to enroll yourself in an MPF scheme and make compulsory contributions; and
- as an employee, your employer is obliged to enroll you in an MPF scheme and the employer has to make mandatory contributions.
The contributions should be calculated according to the individual capabilities and cannot be mixed.
3. I have recently turned self-employed and my relevant income is less than the current minimum relevant income level which is $7,100 a month or $85,200 a year. In that case, do I still have to enroll myself in an MPF scheme?
Yes. Enrollment is compulsory for every self-employed individual aged 18 to 64, regardless of their relevant income, unless they are exempted. You have to enroll yourself in an MPF scheme within 60 days of becoming a self-employed individual.
4. If I am a tutor or consultant, do I have to sign up for an MPF scheme?
You are in the self-employed individual category if you have signed a service contract but are not an employee of the company which means you are obliged to join an MPF scheme and contribute to it as a self-employed individual.
In the case that you have been employed as an employee for 60 days and have a contract of employment with the company, the employer is obliged to sign you up for an MPF scheme and make a contribution for you.
5. What scheme options can I choose?
Self-employed individuals can choose any MPF schemes that are registered. The following are some considerations that have to be taken into account while selecting a scheme:
- the different ways of funds that the scheme offers
- the monthly fees that a person has to pay according to the scheme
- the standard of customer service provided by the scheme’s trustee
The MPFA offers the MPF Fund Platform and the Trustee Service Comparative Platform that can be used to evaluate the services provided by the trustees, the investment objectives, fees, risks, and the performance of funds under different schemes.
6. What kind of information can I ask the trustee for before joining an MPF scheme?
The trustees are supposed to give you the information mentioned below:
- The criteria and information that are needed to apply for the scheme membership;
- The rules that govern the scheme;
- The detailed information of the scheme such as all fees and charges payable under the scheme.
7. Why do I have to declare my tax residency when creating an MPF (Mutual Pension Fund) account?
Every new MPF account holder must provide a self-certification (ie: documents stating that the person who is the account holder is a tax resident outside of Hong Kong) as stated in the requirements under Automatic Exchange of Financial Account Information (AEOI). The absence of self-certification will be a problem for trustees as they will not be able to finish the account opening procedures.
For more information about the AEOI, check out the Hong Kong Trustee’s Association and the Inland Revenue Department.
Making Contributions
1. How much should I be contributing?
| Relevant Income | Mandatory Contribution Amount | |
|---|---|---|
| Monthly Average | Yearly | |
| Less than $7,100 | Less than $85,200 | No contributions required |
| $7,100 – $30,000 | $85,200 to $360,000 | Relevant income x 5% |
| More than $30,000 | More than $360,000 | $1,500 per month or $18,000 per year |
Self-employed individuals can also make voluntary contributions in addition to their mandatory contributions.
2. How should I determine my relevant income if I generate my income from more than one business?
Your relevant income is the total of all the incomes you generate from all your businesses for the period, which is made up of both your profits and losses.
3. What is the method for determining my relevant income?
Self-employed individuals can choose one of the following methods to determine their relevant income:
- considering the relevant income to be the assessable profits that the company gets from the recent notice of assessment issued by the Inland Revenue Department;
- considering the relevant income to be the minimum allowance as stated in section 28 of the Inland Revenue Ordinance;
- filing an income declaration to their trustees or ;
- considering the relevant income to be the maximum relevant income level per year.
4. I am a part of a partnership company. What is the method of calculation of my current relevant income?
The relevant income of the MPF scheme for its financial year should be determined through proportional adjustments according to the amount of profits of the partnership business that you have for that period.
5. When should I be paying my compulsory contributions?
Self-employed individuals can decide to contribute on a monthly or yearly basis. You have to inform your choice of your trustee as soon as you register for the MPF scheme.
If you are planning to make your contributions every month, then you should indicate the monthly contribution day to your trustee and make the contributions on or before that day of each month.
If you decide to contribute every year, the contributions must be made to the trustee on or before the last day of the financial year of the scheme.
If you want to change your contribution frequency (monthly or yearly), you have to inform the trustee at least 30 days before the last day of the financial year of the scheme.
6. If the contribution day is a Saturday, a public holiday, or a gale/black rainstorm warning day, what should I do on such days?
The contribution day will be prolonged to the first day after that day which is not a weekend, a public holiday, or a gale / black rainstorm warning day.
7. What action should I take if my business faces a loss?
If your business faced a net loss, you could notify your trustee by writing a statement stating your situation then, you can suspend the mandatory contributions from the current contribution period until your relevant does not decrease than the minimum relevant income level.
Cessation Of Self-Employment
1. What should I do if I stop being self-employed in the middle of the financial year of a scheme?
You need to adjust your mandatory contribution by the amount you have to pay according to the number of days that you were self-employed during the contribution period. Besides, you are supposed to inform your MPF trustee of your change of self-employment status and make the last contributions before the next contribution period.
2. If I cease being self-employed and get a job with an employer, what should I do with my MPF?
You may choose to:
- Move your MPF to your contribution account of the MPF scheme of your new employer; or
- Move your MPF to any existing personal account in any scheme (including your original MPF scheme).
You are required to fill out the “Scheme Member’s Request for Fund Transfer Form” (MPF(S)-P(M)) and send the form to the new trustee for the funds transfer. You can also give the form to your new employer if you decide to transfer your MPF to their scheme. The form can be issued from your trustee as well.
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