MPFA welcomes the approval of the abolition of the arrangement of using MPF to offset long service payments and severance payments
The MPFA welcomes the Legislative Council (LegCo)’s passage of the Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Bill 2022 (the Amendment Bill) today (9 June) 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. Apart from MPF schemes, the abolition of the offsetting arrangement will also be applicable to occupational retirement schemes under the Occupational Retirement Schemes Ordinance.
The Government plans to implement the abolition of the “offsetting arrangement” upon the full implementation of the eMPF Platform. After the effective day 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.
Mrs Ayesha Macpherson Lau, Chairman of the MPFA, said, “MPF is one of the important pillars of the retirement protection system in Hong Kong. After years of extensive discussion and multiple rounds of consultation, the abolition of the ‘offsetting arrangement’ was finally approved by LegCo. This carries a significant meaning in further refining the MPF System, strengthening the retirement reserves of the working population and enhancing the effectiveness of the retirement protection outcome.”
To facilitate the implementation of the abolition of the “offsetting arrangement”, the MPFA has built the related functionalities on the eMPF Platform to support the Designated Savings Account (DSA) Scheme for the Labour Department to set up DSAs for employers to handle work related to the abolition of “offsetting arrangement”.
Mrs Lau continued, “The MPFA has been working closely with the Labour and Welfare Bureau and the Labour Department in the development of the eMPF Platform. The MPFA, the eMPF Platform Company and the contractor of the Platform project are working at full steam on the development of the eMPF Platform towards the goal of commencing the transfer of MPF account information to the Platform in batches starting from Q2 2023. It is anticipated that the eMPF Platform would come into full operation in 2025 at the earliest.”
9 June 2022