Jun 11, 2022
The abolition of the offsetting arrangement has no retrospective effect. If an employee's employment commenced before the transition date, the employer can continue to use the accrued benefits of the 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 the employee’s SP/LSP in respect of the employment before the transition date (pre-transition portion of SP/LSP).
The pre-transition portion of SP/LSP would be calculated on the basis of the monthly wages immediately preceding the transition date and the years of service before the transition date, whereas the post-transition portion of SP/LSP would be calculated on the basis of the last monthly wages before the termination of employment and the years of service at that time. In comparison with using the last monthly wages before the termination of employment for calculating the total amount of SP/LSP, the aforementioned arrangement can guard against the risk of deliberate dismissals of employees by employers before the abolition takes effect. Under the rare individual circumstances where an employee ends up worse off after abolition of the offsetting arrangement, the Government will make up the difference through administrative means so that the employee will not receive less than what he or she would have been entitled to at present.
The Government will press ahead with the ancillary arrangements for abolishing the "offsetting" arrangement, including setting up the government funding programme, following up in the next legislative session on a Designated Savings Accounts Scheme for employers to cope with future financial needs, and conducting extensive publicity with easy-to-understand information to help employers grasp the abolition of the "offsetting" arrangement and related ancillary measures. Following the full implementation of the eMPF Platform, which is being developed by the Mandatory Provident Fund Schemes Authority, the Government expects that the "offsetting" arrangement could be formally abolished in 2025.
Mrs Ayesha Macpherson Lau, Chairman of the MPFA, and a member of AWAHK, 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.”
Bill