HONG KONG – The Hong Kong government on Friday gazetted the Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Ordinance 2022, which seeks to abolish the Mandatory Provident Fund’s offsetting mechanism.
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In a statement issued on Friday, a spokesman for the government hailed the bill — passed by the Legislative Council on June 9 — as a “significant milestone in enhancing the retirement protection of employees.”
The government expects that the "offsetting" mechanism could be formally abolished in 2025, along with the full implementation of the eMPF Platform
The arrangement currently allows employers to use the pension accruals of their staff to pay off what is owed by way of severance and long-service payments or in the event of termination or closure of business.
The government expects that the "offsetting" mechanism could be formally abolished in 2025, along with the full implementation of the eMPF Platform.
The arrangement as no retroactive effect and employers will no longer be able to apply the offset from what is to be determined as the "transition date".
The government will extend HK$33.2 billion in subsidies over 25 years to help employers cover the payments.
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The abolition of the offsetting arrangement will also be apply to occupational retirement schemes under the Occupational Retirement Schemes Ordinance, the two school provident funds under the Grant Schools Provident Fund Rules and Subsidized Schools Provident Fund Rules, as well as overseas occupational retirement schemes joined by employees from outside Hong Kong which are exempted from the MPF system, the spokesman added.