Earlier this month, the Mandatory Provident Fund Schemes Authority ("MPFA") announced that it is reviewing the maximum and minimum income levels for MPF contributions, which have remained the same for the last 13 years. The review follows consultation with over 30 stakeholder groups, including labour organisations, chambers of commerce, employer representatives and professional bodies. A review report is expected to be submitted to the government by mid-2026.
According to the Federation of Hong Kong Industries, one of the city's largest business chambers, the MPFA has proposed increasing the maximum income level from HK$30,000 to HK$40,000 per month, while also raising the minimum threshold from HK$7,100 to HK$10,000.
A proposed rise in the MPF maximum income level from HK$30,000 to HK$40,000, which would lift the monthly contribution cap from HK$1,500 to HK$2,000, represents a 33% increase in mandatory employer contributions for employees who earn above the new threshold.
From an employer's standpoint - particularly for those with a significant number of employees earning above the threshold - this may translate to material increases in payroll related costs. Industry leaders have already expressed concern that such an adjustment could impact cash flow, especially for SMEs, against a backdrop of uneven economic recovery. They have urged the MPFA to consider phasing in any increases to ease the immediate financial burden.
If the planned proposals are adopted, employers may need to plan for higher recurring operating costs and budget reallocations or adjustment of staffing strategies. For sectors still recovering from economic uncertainty, this may create additional pressure on margins.
For employees, the impact will vary by income level. For those earning above the current maximum income level, they may see their mandatory personal contributions increase by HK$500 per month, strengthening their long-term retirement savings. At the other end of the spectrum, the proposed increase in the minimum relevant income level from HK7,100 to HK$10,000 may exempt more low-income workers from having to make employee MPF contributions which could reduce some of the financial burden on the lowest-paid. Whether the proposed changes would mean that Hong Kong employees might be able to survive on the increased level of retirement savings, is another question.
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