Mandatory Provident Fund

From Wikipedia, the free encyclopedia

Mandatory Provident Fund (traditional Chinese: 強制性公積金), often abbreviated as MPF (強積金), is a compulsory saving scheme for the retirement of residents in Hong Kong. Most of employees and their employers are required to contribute monthly to Mandatory Provident Fund Schemes provided by approved private organisations, according to their salaries and the period of employment.

[edit] History

In traditional Chinese society, a retired person was supposed to be supported by his family and his savings, thus a extended family formed a safety net. Life expectancy was comparatively low compared to today.

As Hong Kong become a developed entity, life expectancy in the territory improved greatly and the birth rate dropped significantly. Extended family were broken into nuclear family. Hong Kong's social security system will be unable to cope with the large number of elderly in the future. There were some calls to establish a central provident fund and heated debates between government, politicians and trade unions ensued in the early 1990s.

In 1994, the World Bank published the report "Averting the Old-Age Crisis: Policies to Protect the Old and Promote Growth", in which a three-pillar approach to protection for the aged was put forward.

The three pillars were:

• a publicly managed, tax-financed social safety net;
• a mandatory, privately managed fully funded contribution scheme;
• voluntary personal savings and insurance.

The MPF System in Hong Kong was designed to form the second pillar of this approach for retirement protection.

[edit] See also

• Employment contract
• Mandatory contribution
• Ocupational retirement scheme
• Provident fund scheme
• Self-employed person
• Trustee
• Master trust scheme

[edit] External links

• Official website of Mandatory Provident Fund Schemes Authority (MPFA)
• Mandatory Provident Fund Schemes Ordinance