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In her latest blog post published today (29 May), MPFA Chairman Mrs Ayesha Macpherson Lau said that the MPF awareness of self-employed persons (SEPs) has improved continually in recent years. Following the launch of the Government’s Employment Support Scheme (ESS) in 2020, the number of SEPs enrolled in MPF schemes has risen from 215,000 in April 2020 to 229,000 in October 2020, representing an increase of 5 percentage points from 73% to 78% in just half a year. As at the end of December 2021, the number further increased to over 231,000, reaching an 80% enrolment rate.

Mrs Lau said that given the wide coverage of the MPF System among the working population, the use of MPF records could streamline the administrative procedures for certain employment related relief measures. For example, having an SEP MPF account is one of the eligibility criteria for the ESS.  As for applicants for the Temporary Unemployment Relief, if they possess MPF accounts and give relevant authorization, the Government-appointed agent could obtain their MPF account information directly from the MPF trustees for the purpose of verifying their applications, through which the application procedures could be simplified with shortened processing time so that the applicants can receive more timely assistance. This demonstrates the wider social function of MPF in addition to providing retirement protection for the working population. 

Mrs Lau noted that with the emergence of the gig economy in recent years, more and more people in the workforce have become slashies SEPs. Under the MPF legislation, SEPs aged 18 to 64, regardless of the amount of their relevant income, must enrol in an MPF scheme. They are required to make mandatory contributions equal to 5% of their relevant income to an MPF scheme regularly (either on a monthly or yearly basis) subject to the minimum and maximum relevant income levels¹. In other words, SEPs with income less than the minimum relevant income level must still enrol in an MPF scheme, but they are not required to make MPF contributions until their income exceeds the minimum relevant income level.

Mrs Lau encouraged SEPs to make voluntary contributions beyond the mandatory requirement to increase their retirement savings. For example, if an SEP with a monthly income of $18,500² starts making MPF contributions at the age of 25, assuming that the income level is adjusted annually at the inflation rate only and the average annualized investment return rate is 4.3%³, it is estimated that about $756,000⁴ of MPF could be accumulated upon retirement at the age of 65 thanks to the compounding effect. Under the same conditions, if the SEP in this example makes voluntary contributions equivalent to 5% of his/her income each month⁵, the MPF accumulated at the age of 65 would increase to $1,512,000⁴, thus providing an even more solid retirement protection.

Mrs Lau added that over the years, the MPFA has proactively encouraged SEPs to enrol in MPF schemes.  Through various promotion activities, SEPs are reminded to observe their responsibilities related to the MPF and take note of the importance of the MPF as an effective tool to enhance their retirement protection. The eMPF Platform under construction will help SEPs manage their MPF with greater ease and flexibility. 

For the full version of the article, please visit the MPFA blog. The blog is in Chinese only.

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29 May 2022

_{1. The current minimum relevant income level is $7,100 per month (or $85,200 per year) and the maximum relevant income level is $30,000 per month (or $360,000 per year). If the relevant income of an SEP is less than the minimum relevant income level, the SEP is not required to contribute to an MPF scheme.}

_{2. The median income level for employed persons in Q4 2021 was $18,500.}

_{3. As at December 2021, the annualized net rate of return of the MPF System since its inception was 4.3%, and the annualized inflation rate was 1.8% over the same period.}

_{4. The estimated MPF in this example is the inflation-adjusted value at 2022 prices. This example is for illustration only and does not imply the actual value of MPF generated from compulsory or voluntary contributions would necessarily reach that estimated level.}

_{5. The additional voluntary contribution is $925 per month at 2022 prices.}