MPF Offsetting Mechanism To Be Abolished In Two Years

Chief Executive John Lee on Friday announced that the Mandatory Provident Fund (MPF) offsetting mechanism will be abolished on May 1, 2025, stopping employers from using their mandatory contributions to workers' accounts to make redundancy and long service payments.

Legco passed a bill last year scrapping the arrangement, but the end date was not stated and officials only said that it should happen no later than 2025.

Speaking at a government Labour Day reception, Lee said the administration will give companies subsidies to help them adjust to the policy change.

"To facilitate the offsetting abolition, the government will set up and implement a government subsidy scheme worth over HK$33 billion spread over 25 years, to share the employers' expenses in severance and long service payments," he said.

Labour minister Chris Sun said officials decided on the end date after considering the matter in detail, including the government's ability to finish preparing for the subsidy scheme.

"This involves coming up with a series of information platforms. So when we consider seeking Legco funding approval, the implementation date of the information scheme, we think that implementing on May 1, 2025 is feasible and that it will be timely," he told reporters at the same event.

Sun said the government will seek Legco funding approval for the subsidy scheme as soon as possible.

Federation of Hong Kong and Kowloon Labour Unions lawmaker Lam Chun-sing welcomed the decision.

He said the group had been worried that the offsetting mechanism might not be abolished until an electronic MPF system was fully up and running.

"This is a good message...Workers now need not worry whether there will be a delay," Lam told RTHK.

The chairman of the pro-business Liberal Party, Peter Shiu, said the announcement was not a surprise to him and many in the business sector.

"Most of us already know the bill was passed last year. So most of us are ready to follow the government's new rules," he told RTHK.

"But now we're waiting for the government to discuss [the details of] the subsidies. For the business sector, certainly we want more help from the government."

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