The Legislative Council passed the "Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Bill 2022" in June 2022 to abolish the arrangement for employers using the accrued benefits of MPF mandatory contribution made for employees to offset severance payments (SP) / long service payments (LSP) under the Employment Ordinance ("offsetting arrangement"), in order to further enhance the MPF's retirement protection function. |
What is meant by the MPF offsetting arrangement?
Under the Employment Ordinance, employees may be entitled to SP/LSP payable by their employers. Employers can offset the SP/LSP payable to employees under the Employment Ordinance against the MPF derived from the employer’s mandatory and voluntary contributions.
When will the abolition of the MPF offsetting arrangement be implemented?
The abolition of the offsetting arrangement will be implemented in tandem with the full implementation of the eMPF Platform of the Mandatory Provident Fund Schemes Authority. The eMPF Platform is expected to be in full operation by 2025. After the effective day (transition date) for the abolition of the “offsetting arrangement”, employers can no longer use accrued benefits of MPF mandatory contributions made for their employees to offset employees’ SP/LSP for the employment period starting from that day.
Does the abolition have retrospective effect?
The abolition has no retrospective effect. Employers may continue to use the accrued benefits derived from their MPF contributions (irrespective of whether the contributions are made before, on or after the transition date, and irrespective of whether the contributions are mandatory or voluntary) to offset an employee’s SP/LSP entitlement in respect of the employment before the transition date.