Info Center

The summer holidays have come to an end, and many young graduates may have made up their mind about whether to continue their studies or start working. Those who plan to enter the workforce should prepare themselves for new challenges, including managing their MPF, which is a 30- to 40-year investment.
 
The Mandatory Provident Fund Schemes Authority (MPFA) reminds fresh graduates who will join the workforce to note the following points:
 
Scheme enrolment
 
Unless you are exempt persons as stated in the legislation, if you are aged 18 to 64 and have been employed for a continuous period of 60 days or more, no matter you work full-time or part-time, you are required to join an MPF scheme. Your employer must enrol you in an MPF scheme within the first 60 days of your employment and make contributions on time. The 60-day employment rule, however, does not apply to “casual employees” in the catering and construction industries.
 
Contribution amount
 
Contributions are generally made on a monthly basis for monthly-paid employees. The amount of MPF contributions is subject to minimum and maximum relevant income levels. Relevant income means any wages, salary, leave pay, fee, commission, bonus, gratuity, perquisite or allowance, expressed in monetary terms, paid or payable by an employer to an employee in consideration of your employment. If you earn less than $7,100 monthly, you do not have to make contributions, but your employer still needs to contribute 5% of your earnings. If you earn $7,100 or more monthly, you and your employer must contribute 5% each, up to a maximum of $1,500 per month each.
 
Contribution holiday
 
As an employee, you are not required to make contributions for the first 30 days of employment and the incomplete wage period that immediately follows. Your employer, however, is required to make MPF contributions for you from the first day of employment.
 
Fund selection
 
You have to select which fund(s) to invest in under the MPF scheme chosen by your employer. In general, if you are young, your risk tolerance level is relatively higher than that of an older member, as you have a longer investment horizon before retirement, which allows you to consider a more aggressive investment strategy.
 
If you do not indicate your fund choice(s) in the enrolment form, your MPF contributions will be invested according to the default arrangement of your scheme. However, this default arrangement may not match your investment target or risk tolerance level.
 
Account consolidation
 
If you previously worked at summer jobs, you may have one or more MPF accounts. The MPFA advises you to consolidate your personal accounts and consider transferring your accumulated MPF benefits to the contribution account opened under your current employment for easier management.
 
The MPFA also reminds you to manage your MPF when you change jobs and consider consolidating multiple accounts. It is best to hold just one personal account.
 
The MPFA has a Facebook fan page called Rolling My Money and a publication available on the MPFA website entitled Embarking on my MPF journey, which provides useful MPF information for young people. In addition, the MPFA’s mobile phone application MVP@Workplace offers job-searching skills and MPF tips to young people. For members’ convenience, the MPF investment education website has an online Retirement Planning Calculator to help MPF members calculate their retirement needs.
 
- Ends -

3 September 2015