Abolition of MPF Offsetting Arrangement

1 May 2025 is the “transition date”, i.e. the date that the abolition takes effect.

 After the abolition comes into effect: 

• The accrued benefits derived from employers’ MPF mandatory contributions (ERMC) cannot offset employees’ severance payment (SP) and long service payment (LSP) in respect of the years of service starting from the “transition date”, but can continue to offset the employees’ SP/LSP in respect of the years of service before the “transition date”.

• The accrued benefits derived from employers’ MPF voluntary contributions (ERVC) and gratuities based on employees’ years of service can continue to offset employees’ SP/LSP (irrespective of the years of service before or after the “transition date”).

The abolition of the offsetting arrangement has no retrospective effect. For those  employees who commence employment before the transition date and cease to be employed on or after the transition date, employers can continue to use MPF derived from the employer contributions (irrespective of whether the contributions a

re mandatory or voluntary, and whether the contributions are made before, on or after the transition date) throughout the employees’ whole employment period to offset the LSP/SP of the employees in respect of the years of service before the transition date.

For those employees who cease to be employed before the transition date, employers can use the MPF derived from the employer mandatory and voluntary contributions to offset LSP/SP of their employees.

Source：

Labour Department ：https://www.op.labour.gov.hk/tc/index.html