Labour bill stopping Hong Kong bosses from raiding MPF funds to come into force in May 2025, city leader reveals
2023.04.28 18:28Hong Kong’s leader has announced that a labour bill stopping bosses from dipping into staff pensions to cover severance and long-service payments will take effect in May 2025 to ensure the city’s workers have better retirement protection.Chief Executive John Lee Ka-chiu on Friday revealed that the bill, which abolishes the so-called offsetting mechanism under the Mandatory Provident Fund (MPF), would come into force on Labour Day two years from now, ending a decade-long wait in improving workers’ welfare.“I hereby declare that I have made a decision that the scrapping of the ‘offsetting mechanism’ will take effect on May 1, 2025,” Lee said at a Labour Day reception event, receiving a round of applause from the audience.“The bill passed last year is an important milestone in strengthening retirement protection for employees … The government will formulate and implement subsidy plans, which costs up to HK$33 billion (US$4.2 billion) for employers in the next 25 years to s
Hong Kong’s leader has announced that a labour bill stopping bosses from dipping into staff pensions to cover severance and long-service payments will take effect in May 2025 to ensure the city’s workers have better retirement protection.
Chief Executive John Lee Ka-chiu on Friday revealed that the bill, which abolishes the so-called offsetting mechanism under the Mandatory Provident Fund (MPF), would come into force on Labour Day two years from now, ending a decade-long wait in improving workers’ welfare.
“I hereby declare that I have made a decision that the scrapping of the ‘offsetting mechanism’ will take effect on May 1, 2025,” Lee said at a Labour Day reception event, receiving a round of applause from the audience.
“The bill passed last year is an important milestone in strengthening retirement protection for employees … The government will formulate and implement subsidy plans, which costs up to HK$33 billion (US$4.2 billion) for employers in the next 25 years to share their costs on severance and long-service payment and assist them to adapt the changes.
“Looking forward, my team and I will communicate frankly with both employers and employees on labour issues, and let employees share the fruits of economic development.”
Legco passed the proposed legislation to abandon the offsetting mechanism last June and said it must be cancelled no later than the end of 2025.
Hong Kong to scrap MPF offsetting mechanism, protecting workers’ pensions
Under the new bill, employers would no longer be able to deduct severance or long service payments from their portion of MPF contributions.
To help with the transition, the government will introduce a 25-year subsidy scheme totalling HK$33.2 billion to support employers with severance payouts.
In the first three years of the scheme, employers will only be liable to pay each employee HK$3,000 if the total amount owed to dismissed workers in a year does not exceed HK$500,000, with the government footing the rest of the bill.
Payment caps for employers will then rise gradually over the next six years, while subsidies will be reduced progressively in the following 22 years.
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