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How much we need to contribute to the MPF fund?
Reference from MPFA:
You and your employees are required to contributed to the MPF, subject to a minimum of 5% of the relevant income of the employee, and also the minimum and maximum level of relevant income of $7,100 and $30,000 respectively.
|Monthly Relevant Income||Amount of Mandatory MPF Contributions Payable by Employer||Amount of Mandatory MPF Contributions Payable by Employee|
|Less than $7,100||Relevant income x 5%||No contributions required|
|$7,100 to $30,000||Relevant income x 5%||Relevant income x 5%|
|More than $30,000||$1,500||$1,500|
How to Calculate Relevant Income?
"Relevant income" refers to all monetary payments paid or payable by an employer to an employee, including wages, salary, leave pay, fees, commissions, bonuses, gratuities, perquisites or allowances, but excluding severance payments or long service payments.
Refer to the definition of "Relevant income" under "Mandatory Provident Fund Schemes Ordinance".
If you offer a wide range of payment items to your employees, and get into trouble in calculation of relevant income given the need to determine which items to include and exclude, you can resort to HR system such as Backstage, where you can define whether a payment type is "Relevant income" by some simple clicks.
Timing of Contribution of MPF:
Refer to the definition of "Contribution Day" under "Mandatory Provident Fund Schemes Ordinance".
As an employer, your MPF contribution should begin starting from the first day your employees are employed. For employees, however, "contribution holiday" applies so that employees are not required to make contributions for the first 30 days of employment.
In terms of actual transfer of funds, you should pay your first contributions to your trustee on or before the 10th day after the last day of the calendar month on which the 60th day of employment falls.
In HR system such as Backstage, withholding of MPF contribution for the first 60-day can again be entertained by choosing the right pre-defined variables.
It goes without saying that by using the right HR system, monthly contribution details in Excel format can be generated with ease to save time on administration.